In the context of aggregate supply, the short run is defined as the period during which
a. some prices are set by contracts and cannot be adjusted.
b. prices can change, but neither aggregate supply nor aggregate demand can shift.
c. individuals have sufficient time to modify their behavior in response to price changes.
d. quantity changes cannot occur in response to changes in relative prices.
A
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Workers and firms both expect that prices will be 2.5% higher next year than they are this year. As a result
A) workers will be willing to take lower wages next year, but not lower than a 2.5 percent decrease. B) aggregate demand will increase by 2.5%. C) the purchasing power of wages will rise if wages increase by 2.5%. D) the short-run aggregate supply curve will shift to the left as wages increase.
Perfect competition is a market structure
A) in which any firm would have serious impediments to entry or exit. B) in which individual buyers and sellers have no effect on the market price. C) resulting from individual firms selling highly differentiated products. D) where there is significant regulation and markets are always efficient.