If workers expect inflation, and negotiate wage increases that exactly match price increases, the result is a
A. horizontal aggregate supply curve at the level of potential GDP.
B. vertical aggregate supply curve at the level of potential GDP.
C. horizontal aggregate demand curve at the level of potential GDP.
D. vertical aggregate demand curve at the level of potential GDP.
Answer: B
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Diseconomies of scale is
A) a short-run phenomenon. B) the result of decreasing marginal returns. C) a long-run phenomenon. D) the result of increasing marginal returns. E) possible only when the firm's plant size is fixed.
An efficient allocation of resources occurs when we
A) produce the goods and services that people need. B) cannot produce more of a good or service without giving up some other good or service that we value more highly. C) produce the goods and services that people want. D) cannot produce more of a good or service without giving up some other good or service that we need.