The short-run aggregate supply curve (SRAS) slopes upward to the right because unexpected increases in prices will
a. increase aggregate demand as consumers buy more.
b. decrease aggregate demand as consumers buy less.
c. cause firms to expand output since the higher product prices will improve profitability.
d. cause firms to reduce output since the higher product prices will decrease profit margins.
C
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Consider the market for feather pillows. If there is an increase in the price of feather dusters, a substitute in production for feather pillows, then
A) there is a downward movement along the demand curve for feather pillows. B) the supply curve for feather pillows shifts leftward. C) the price of feather pillows decreases. D) the demand curve for feather pillows shifts rightward. E) the demand curve for feather pillows shifts leftward.
Typically, the economy recovers fairly quickly from a recession. Why did this NOT happen in the United States during the Great Depression?
What will be an ideal response?