Distinguish between a movement along the aggregate supply curve and a shift of the entire aggregate supply curve. What factors cause each to occur?
The aggregate supply curve is analogous to an individual firm's supply curve in microeconomic analysis. A change in the economy's price level will cause a movement along the aggregate supply curve. A change in one of the determinants of aggregate supply will cause a shift of the aggregate supply curve. Among the most important determinants are the level of money wages, other resource prices, and the level of technology and productivity.
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If Cathy has a bond that will pay $1,000 one year from now and its current price is $800, what is the current interest rate?
a. 10 percent b. 25 percent c. 20 percent d. 200 percent e. 2 percent