A decrease in the price level causes a ________ the IS curve and a ________ the aggregate demand curve
A) movement up along; movement up along
B) shift to the right of; movement up along
C) movement down along; movement down along
D) shift to the left of; movement down along
A
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There is much evidence to suggest that airlines are more likely to match price cuts than price increases. Which of the following best explains this evidence?
A) No one airline wants to be the first to renege on a tacit collusive agreement in which all airlines implicitly agree to match price cuts but not price increases. B) An airline fears that if it does not match a price cut, its sales may fall considerably but if it does not match a price increase, it will be able to attract customers away from its rivals. C) The law of demand which states that an increase in price leads to a decrease in quantity demanded. D) Airlines have different costs of production and therefore it is more difficult to agree on a price increase than on a price decrease.
When a freely functioning market is in disequilibrium:
a. the government must set a price ceiling. b. the government must set a price floor. c. the price and quantities demanded and/or supplied change until equilibrium is established. d. it will continue to remain in disequilibrium. e. it will reach equilibrium at a very high/low price.