Distinguish between scarcity and shortage
Scarcity implies that people want more of a good than is freely available. Shortage implies that people want more than is available at the going price. All economic goods are scarce, whereas there are shortages only in the presence of price ceilings that set price below equilibrium levels.
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Technological advancements that increase labor's productivity shift the labor supply curve to the right
Indicate whether the statement is true or false
If the aggregate supply curve is vertical, an increase in aggregate demand will
A) increase both real and nominal GDP by the full multiplier effect. B) increase real GDP but not nominal GDP. C) increase the price level but not real GDP. D) increase real GDP by less than the full multiplier effect because of rising prices.