Suppose the economy is at full employment and firms become more optimistic about the future profitability of new investment. In the short​ run: a. Prices will decline. b. Output will decline. c. Aggregate demand will shift to the left. d. Unemployment will decline.

Under perfect competition, if an industry is characterized by positive economic profits in the short runQuestion 2Select one:a.firms will enter the market in the long run and the short-run supply curve will shift outward.b.firms will leave the market in the long run and the short-run supply curve will shift inward.c.firms will leave the market in the long run and the short-run supply curve will shift outward.d.firms will enter the market in the long run and the short-run supply curve will shift inward.Clear my choice

Assume that the typical firm in a perfectly competitive market is making economic profit. Which of the following sequence of events best describes the change in prices and output that will occur over the long run as a result of free entry?Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer.aThe short-run market supply curve shifts to the right, causing prices to fall; aggregate (total) industry output increases.bThe market demand curve shifts to the right, causing prices to rise; aggregate market output increases.cThe market demand curve shifts to the left, causing prices to fall; aggregate market output decreases.dThe short-run market supply curve shifts to the left, causing prices to rise; aggregate market output decreases.

Using diagrams, show the effects of eachof the following on short-run equilibrium,explaining what happens to the equilibriumprice level, output and unemployment.abcdefghThe price of oil (an important input inproduction) increases.Firms are pessimistic about the futureofthe economy.Below-zero temperatures destroyagricultural output.The government lowers taxes onfirms' profits.There is a large rise in stock marketprices.The government eliminates subsidieson agricultural products.A war destroys a portion of aneconomy's physical capital.Consumer confidence improves.

There has been a decrease in investment. As a result, real GDP will ________ in the short run, and ________ in the long run.Question 6Answera.decrease; increase to its initial levelb.increase; increases furtherc.decrease; decrease furtherd.increase; decrease to its initial value

The economy is initially at its long-run equilibrium. A diplomatic dispute with its trading partner countries now leads to a decline in its exports. In the short run, the aggregate demand curve shifts left. In the long run, the price level decreases, the output returns to its potential, and real wages decrease. In the short run, the aggregate demand curve shifts right. In the long run, the price level increases, the output returns to its potential, and real wages do not change. In the short run, the aggregate demand curve shifts right. In the long run, the price level increases, the output returns to its potential, and real wages increase. In the short run, the aggregate demand curve shifts right. In the long run, the price level increases, the output returns to its potential, and real wages decrease. In the short run, the aggregate demand curve shifts left. In the long run, the price level decreases, the output returns to its potential, and real wages do not change.