What are menu costs and why does high inflation increase menu costs?
Menu costs are the costs of changing prices. When inflation is higher, firms will change their prices more frequently.
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Suppose that there is a decrease in the costs of production that shifts the short-run aggregate-supply curve right. If there is no policy response, then eventually
a) because unemployment is high, wages will be bid up and short-run aggregate-supply curve will shift right. b) because unemployment is high, wages will be bid down and short-run aggregate-supply curve will shift right. c) because unemployment is low, wages will be bid up and short-run aggregate-supply curve will shift right. d) because unemployment is low, wages will be bid up and short-run aggregate-supply curve will shift left.
The four main forms of income that economists have identified include all of the following except
a. wages b. wealth c. rent d. profit e. interest