In the above figure, if initial equilibrium is at point A and there is a fully anticipated increase in aggregate demand from AD1 to AD2 due to an anticipated increase in the money supply, then
A. the economy will move directly from point A to point B, and will remain at point B in the long run.
B. the price level will shift to P2 in the short run.
C. the economy will move directly from point A to point C without passing through point B.
D. the price level will shift to P2 in the long run.
Answer: C
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All of the following are explanations of the post-1973 productivity slowdown except
A) problems in measuring productivity. B) changes in the legal and human environment. C) higher oil prices. D) greater competition from foreign imports.
If the market price is $5 and you are currently producing at a level where average total cost is $3 and falling, you should:
A. produce until the average total cost and average revenue are equal. B. shut down. C. produce only enough to cover variable costs. D. produce where MR = MC.