Refer to the graph below. Assume that the economy is initially in equilibrium at the intersection of AD1 and AS1. Suppose that there is economic growth which shifts AS1 to AS2. Because of the shift from AS1 to AS2, a monetarist following a monetary rule would call for an increase in aggregate demand such that the price level and quantity of real domestic output would be:
A. P4 and Q2
B. P3 and Q2
C. P2 and Q2
D. P1 and Q2
B. P3 and Q2
Economics
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If a union sets the wage rate to maximize the total wage receipts of its members, the price elasticity of demand for labor would be
A) zero. B) numerically equal to 1. C) finite, but greater than -1. D) positive, but less than 1.
Economics
An agreement among firms to charge the same price or otherwise not to compete is called
A) a payoff matrix. B) a subgame-perfect equilibrium. C) a Nash equilibrium. D) collusion.
Economics