If firms are price setters, a small decline in the demand for their outputs will cause them to
A) reduce price and reduce the level of output produced.
B) reduce output in the short run, but reduce price in the long run.
C) reduce price in the short run, but reduce output only in the long run.
D) increase price in the short run to offset the effect on profits of a decline in output.
B
You might also like to view...
If one day the dollar is trading at 1.00 euro per dollar and the next day the exchange rate is 0.88 euros per dollar, one possible factor that might have led to this change is
A) an increase in the U.S. interest rate. B) a decrease in the European interest rate. C) the Fed buying dollars. D) the Fed selling dollars. E) an increase in the expected future exchange rate.
If you have trouble finding a job because of a slowdown in the overall economy, we would say that you are
A) cyclically unemployed. B) frictionally unemployed. C) seasonally unemployed. D) structurally unemployed.