In the long run, firms in a competitive market
A) shut down because profit goes to zero.
B) lose money.
C) are not profit maximizing.
D) earn zero economic profit.
D
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Refer to Scenario 1 . If you start the course in such a way that each exam score is better than your previous average what should happen to your average score?
What would happen to your average if it was below your previous exam score? Explain.
The economy is in long-run equilibrium when there is an incorrectly anticipated increase in aggregate demand brought about by expansionary monetary policy. Specifically, aggregate demand increases by less than people anticipate (bias upward). According to new classical theory, the price level will __________ and Real GDP will __________ in the short run. In the long run, the price level will be
__________ than it was before aggregate demand increased. A) rise; rise; lower B) rise; fall; higher C) rise; fall; higher D) fall; rise; lower E) rise; rise; higher