Frank owns Frank's Shoes. During a particular period, the price of shoes rises and Frank produces more shoes by hiring more workers and using more material, such as leather. However, he still works with the same size factory because he has a long-term lease. You know that
a. by producing more, Frank's supply curve of shoes shifts to the right
b. the factory is overworked so that Frank cannot maintain the production levelhe selected
c. by producing more, Frank's demand curve for shoes shifts to the left
d. Frank is producing in the short run
e. Frank is producing in the long run
D
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In the figure above, point A is undesirable because
A) there is an inefficient use of resources. B) too much health care is being produced. C) the opportunity costs of health care is too high. D) point E is a more realistic option in this economy.
You agree to lend $1,000 for one year at a nominal interest rate of 10%. You anticipate that inflation will be 4% over that year. If inflation is instead 3% over that year, which of the following is true?
A) The person who borrowed the $1,000 will be worse off as a result of the unanticipated decrease in inflation. B) The real interest rate you earn on your money will be negative. C) The purchasing power of the money that will be repaid to you will be lower than you expected. D) The real interest rate you earn on your money is lower than you expected.