What does the classical model predict will happen when an increase in aggregate demand causes the overall price level to rise?
a. Sticky upward prices will allow producers to quickly boost their output.
b. Input suppliers will compete against each to quickly drive down input prices.
c. A prolonged inflationary gap will occur at the higher price level.
d. Input suppliers will bid up input prices to quickly adjust to the higher price level.
d. Input suppliers will bid up input prices to quickly adjust to the higher price level.
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Kevin has a lot of free time and he decides to pick up a new hobby. He has two options—he can take art classes or can sign up for French cooking classes
He estimates that the art classes would cost him $70, and would provide him with a benefit of $100. On the other hand, the cooking classes would cost him $120, but provide him benefits worth $160. Use cost-benefit analysis to arrive at the optimum choice for Kevin.
The process by which investment banks guarantee a certain price to a firm issuing stocks or bonds is known as:
A) underwriting B) securitization C) proprietary trading D) microlending