Assume the current price of good X is too high, i.e., it is above the equilibrium price. Describe the changes that would occur in a market as a result, i.e., explain how the market would adjust to equilibrium
What will be an ideal response?
The fact that the current price is too high would mean that there is a surplus of good X. Suppliers would respond by decreasing the price of the good and, as a result, quantity supplied. The decrease in price would also cause quantity demanded to increase until the surplus (excess supply) was eliminated.
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Suppose Americans buy inputs from foreigners. When the price of foreign inputs falls, the U.S. SRAS curve __________, which tends to __________the U.S. price level
A) shifts rightward; reduce B) shifts leftward; increase C) shifts leftward; reduce D) remains constant; increase
Refer to the diagram pertaining to two nations and a specific product. In equilibrium, the nation represented by lines FA and FC will:
A. export H to the country represented by lines GB and GD.
B. import H from the country represented by lines GB and GD.
C. pay price F for its imports.
D. receive price G for its exports.