Suppose that wages and prices are quite flexible, so that the short-run aggregate supply curve is steep. In that case, ________
A) policies to stabilize inflation are probably needed more than policies to stabilize economic activity
B) supply shocks will destabilize inflation, but have minimal impact on output
C) demand shocks will destabilize output, but have minimal impact on inflation
D) all of the above
E) none of the above
A
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A. households are on the buying side of both product and resource markets. B. businesses are on the selling side of both product and resource markets. C. households are on the selling side of the resource market and on the buying side of the
product market. D. businesses are on the buying side of the product market and on the selling side of the resource market. A. capital goods and consumer goods. B. free and controlled. C. product and resource. D. household and business.
Cross elasticity of demand is:
A. Negative for complementary goods B. Negative for substitute goods C. Unitary for inferior goods D. Positive for inferior goods