An aggregate supply curve that is a vertical line must be:
A. a short-run curve.
B. an individual firm's supply curve.
C. an individual industry's supply curve.
D. a long-run curve.
Answer: D
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If the government eliminates a tax on a good with a perfectly elastic supply, who benefits most?
A) buyers B) sellers C) buyers if the demand is also perfectly elastic, otherwise sellers D) buyers if the demand is unit elastic, otherwise sellers E) Buyers and sellers benefit equally.
Refer to Figure 17-2. Suppose the economy is at point B in the figure above. Which of the following is true?
A) The economy is producing at potential GDP. B) The current unemployment rate is 5%. C) Expected inflation and actual inflation are the same. D) The expected rate of inflation is 3%. E) The natural rate of unemployment is 3.8%.