After a small hurricane in Florida, unemployment is low as there is a great deal of construction work and businesses run at full capacity. This suggests that
A) the economy is operating above the full-employment level and will eventually adjust back to long-run aggregate supply.
B) living standards are falling as employment and economic activity are too high.
C) the economy is operating below its long-run level and living standards are less than they would have been without the hurricane.
D) the hurricane is beneficial since it is increasing employment and replacing less efficient capital with newer and more efficient capital.
A
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We use interest rates to measure the opportunity cost of holding money
Indicate whether the statement is true or false
An economy in which output has decreased and prices have decreased would suggest a:
A. decrease in short-run aggregate supply. B. increase in aggregate demand. C. increase in short-run aggregate supply. D. decrease in aggregate demand.