Suppose that a competitive market is initially in equilibrium. Then demand increases. If some resources used in production are not available in sufficient quantities for entering firms,
a. the long-run market supply curve will be upward sloping.
b. the long-run market supply curve will be perfectly elastic.
c. in the long run firms will suffer economic losses, leading them to exit the industry.
d. the number of firms will decrease, and the market will become a monopoly.
a
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Suppose you place $10,000 in a retirement fund that earns a nominal interest rate of 8 percent. If you expect inflation to be 5 percent or lower, then you are expecting to earn a real interest rate of at least:
a. 1.6 percent. b. 4 percent. c. 5 percent. d. 3 percent.
As the economy falls from the peak to the trough of the business cycle:
A. Inflationary pressures should increase as unemployment rises. B. Cyclical unemployment should increase and real GDP should decline. C. Frictional unemployment should fall because people find jobs more quickly. D. Structural unemployment will be eliminated.