Multiple Choice
Suppose that prices are sticky in the short-run. Which of the following best describes the economy's response to a positive demand shock?
A) Firms' inventories will increase, causing them to cut production. Ultimately, real GDP will decrease and unemployment will increase.
B) Firms' inventories will decrease, causing them to increase production. Ultimately, real GDP will increase and unemployment will decrease.
C) Firms' inventories will increase, causing them to cut production. Ultimately, real GDP will increase and unemployment will increase.
D) Firms' inventories will increase, causing them to cut production. Ultimately, real GDP will decrease and unemployment will decrease.
Correct Answer:
Verified
Correct Answer:
Verified
Q20: Economists believe that most short-run fluctuations are
Q21: (Consider This) Suppose that Toyota buys a
Q22: <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB8601/.jpg" alt=" Refer to the
Q23: At the end of the summer driving
Q24: How does inflation affect people's standard of
Q26: Prices tend to be sticky because<br>A) firms
Q27: When demand shocks lead to recessions, it
Q28: Supply shocks occur any time there is
Q29: Which of the following is not an
Q30: Which of the following is most closely