If wages are sticky, then a smaller than expected increase in the price level
a) reduces the real costs of production, so the aggregate quantity of goods and services rises.
b) raises the real costs of production, so the short-run aggregate supply curve shifts left.
c) reduces the real costs of production, so the short-run aggregate supply curve shifts right.
d) raises the real costs of production, so the aggregate quantity of goods and services declines.
Ans: d) raises the real costs of production, so the aggregate quantity of goods and services declines.
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The concurrent problems of inflation and unemployment are termed:
a. depression. b. downturn. c. deflation. d. demand-pull inflation. e. stagflation.
Suppose an airline ticket from Charlotte to Dallas costs $525 . A bus ticket is $325 . Traveling by plane will take 5 hours, compared with 25 hours by bus. Thus, the plane costs $200 more but saves 20 hours of time . Other things constant, an individual will gain by choosing air travel if, and only if, each hour of her time is valued at more than
a. $10 per hour. b. $13 per hour. c. $20 per hour. d. $105 per hour.