Figure 10-14
The economy's initial aggregate demand (AD0) and aggregate supply (SRAS0 and LRAS) curves are illustrated in . Which of the following is true?
a.
The profits of business firms are higher at I than J.
b.
H is a point of long-run equilibrium.
c.
Downward pressure on prices occurs at point G.
d.
Point F is consistent with long-run equilibrium.
d
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Inefficient use of resources is shown on the production possibilities curve
A) by an inward shifting of the curve. B) by a point inside the curve. C) by a point near the top of the curve. D) by a point outside the curve.
Suppose that equilibrium in the dollar-pound market occurs where 300 million pounds are demanded at a price of $1.75 per pound. If the current exchange rate is $1.60 per pound, we know that
a. the dollar-pound market is in equilibrium b. there is an excess demand for pounds, so the dollar price of the pound will rise c. there is an excess demand for pounds, and the pound is overvalued d. there is an excess supply of pounds, and the dollar price of the pound will rise e. there is an excess supply of pounds, and the dollar price of the pound will fall