In the above figure, assume the economy is in equilibrium at point d. Then the Fed decreases the money supply so that the new aggregate demand curve is AD1. In the long run, the new price level will be

Suppose the economy is initially in long-run equilibrium. For each of the shocks listed below, explain the long-run effects on output and the price level

(a) Labor supply decreases. (b) The government shuts down the Bureau of Economic Analysis. (c) Productivity increases.

How do legal controls on prices lead to corruption?

a. Persons who benefit from the controls are willing to bribe officials to keep the controls in place. b. Persons who make the laws may favor certain groups at the expense of others. c. Selling in the black market is very profitable, and persons therefore willingly break the law. d. Discrimination may occur as a means to limit buying or selling select groups. e. All of the above are correct.