Refer to the diagram. The initial aggregate demand curve is AD 1 and the initial aggregate supply curve is AS 1 . In the long run, the aggregate supply curve is vertical in the diagram because:
A. nominal wages and other input prices are assumed to be fixed.
B. real output level Q f is the potential level of output.
C. price level increases produce perfectly offsetting changes in nominal wages and other input prices.
D. higher-than-expected rates of actual inflation reduce real output only temporarily.
C. price level increases produce perfectly offsetting changes in nominal wages and other input prices.
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The following is not an example of risk aversion
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When buying a car from a commission salesman you improve your bargaining position by
a. shopping for last year's model when the new model year cars are arriving b. shopping when the showroom is full of customers c. shopping when the car lot has few cars left unsold d. shopping toward the beginning of the month