The sticky price explanation of the short-run aggregate supply curve says that when the average price level rises,
A. because of adjustment costs associated with changing prices, some firms will not raise their prices immediately which may temporarily boost their sales.
B. firms will raise their output prices by more than the increase in the average price level to make up for the shortfall in sales.
C. consumers are unwilling to pay higher prices resulting in a decrease in aggregate demand.
D. some firms will immediately pass the higher prices to consumers.
Ans: A. because of adjustment costs associated with changing prices, some firms will not raise their prices immediately which may temporarily boost their sales.
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If the price level was 100 in 2014 and 102 in 2015, the inflation rate was
A) 102%. B) 20%. C) 2%. D) 0.2%.
Which of the following is true at the output level where P=MC?
A) The monopolist is maximizing profit. B) The monopolist is not maximizing profit and should increase output. C) The monopolist is not maximizing profit and should decrease output. D) The monopolist is earning a positive profit.
Will the national debt have to be paid off (i.e., reduced to zero) in the future? a. No, it can continually be refinanced
b. Yes, if it is not paid off, the U.S. Treasury will have to file for bankruptcy. c. No, technically, it is not a contractual obligation of the federal government. d. Yes, but since most of the debt is held by Federal Reserve Bank, its re-payment would merely involve an accounting transaction between the Fed and the Treasury.
Which of the following could cause the supply curve of labor to shift to the right?
a. an increase in wealth b. a decrease in population c. a decrease in wages d. an increase in employment opportunities e. an increase in the wage rate