Answer the following statements true (T) or false (F)
1. If expectations are always met, then firms would never contribute to any of the short-run fluctuations in employment and output that are observed in real-world economies
2. If the prices of goods and services were flexible, then the economy could always produce at its optimal capacity.
3. An unexpected negative demand shock would lead to a decrease in inventories
4. An unexpected negative demand shock would lead to a decrease in real GDP.
5. Sticky prices could be the result of firms being afraid of price wars.
1. TRUE
2. TRUE
3. FALSE
4. TRUE
5. TRUE
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Acquiring knowledge and skills by participating in the production process is called "learning by doing."
Indicate whether the statement is true or false
The key to a country's economic growth is combining _______ with _______.
A. human capital; physical capital B. legal institutions; cultural institutions C. ideas; good institutions D. human and physical capital; ideas and good institutions