If the economy is not in a long-run equilibrium and other things are equal, then prices will eventually adjust to bring the economy to a long-run equilibrium.
Answer the following statement true (T) or false (F)
True
If the economy is not in a long-run equilibrium, pressures to adjust prices will arise, and when prices do change, the SAS curve will shift until a long-run equilibrium is reached.
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Which of the following does NOT occur if Home starts a policy of permanent fiscal expansion:
A) Home's exchange rate increases. B) Foreign's interest rate rises. C) Home output rises. D) Foreign output rises. E) Current Account Balance increases.
If a monopolist is producing the quantity at which price equals marginal cost, it should
A) continue to produce this amount if it wants to maximize profits. B) reduce output if it wants to maximize profits. C) reduce price and keep output unchanged if it wants to maximize profits. D) increase output if it wants to maximize profits.