If the public believes the commitment to a nominal anchor to be credible, the effect of a positive aggregate demand shock is for ________
A) short-run aggregate supply to shift up
B) short-run aggregate supply to be unaffected
C) short-run aggregate supply to shift down
D) inflation, but not economic activity, to increase
B
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The above figure shows the market for french fries at fast food joints. If the price of potatoes rises and simultaneously people become concerned that french fries can cause heart attacks the
A) demand curve for french fries shifts from D2 to D1 and the supply curve of french fries does not shift. B) demand curve for french fries shifts from D2 to D1 and the supply curve of french fries shifts from S2 to S1. C) demand curve for french fries shifts from D2 to D1 and the supply curve of french fries shifts from S1 to S2. D) demand curve for french fries does not shift, and the supply curve of french fries shifts from S1 to S2.
There are three leading manufacturers of smart phones in Techland. Their products are considered to be perfect substitutes
a) Will these firms earn zero economic profits in the long run? Explain your answer. b) What can the firms do to earn maximum profit?