c. d. exogenous; endogenous 10. When private property rights are established, th
ID: 1109043 • Letter: C
Question
c. d. exogenous; endogenous 10. When private property rights are established, the expected payoffs from i investment will and the amount of production will a. increase; increase b. decrease; decrease c. increase; decrease d. decrease; increase e. increase; remain unchanged 11. The wealth effect, interest rate effect, and international trade effect all explain why the a. aggregate demand (AD) curve has a negative slope. b. AD curve has a positive slope. c. aggregate supply (AS) curve has a positive slope d. AS curve has a negative slope. e. price level and real gross domestic product (GDP) are unrelated. 12. An increase in the value of the dollar will: a. have no effect on aggregate demand or supply b. decrease aggregate supply. c. increase aggregate supply d. increase aggregate demand. e. decrease aggregate demand. 13. If the price level falls by 5%, then all else being equal, the long-run aggregate supply curve will: a. remain unchanged. b. shift to the right to reflect an increase in output of 5%. c. shift to the right to reflect an increase in output of more than 5%. d, shift to the left to reflect a decrease in output of 5%. e, shift to the left to reflect a decrease in output of more than 5%. 14. The slope of the short-run aggregate supply curve can be explained by a. the fact that all prices are sticky in the short run. b. sticky input prices and flexible output prices. c. flexible input prices and sticky output prices. d. the fact that all prices are flexible in the short run. e. the fact that all prices except wages are flexible in the short run. 15. Suppose there is a surge in stock market values. In the short run, we would e and the unemployment rate to level to a. increase; decrease b. increase; increaseExplanation / Answer
10) Option A
This is correct because this will reduce transaction cost, cost of unnecessary legal disputes, filing lawsuits and claiming for property rights and rights for production and punitive fines for operating in disputed area
11) Option A
These are the factors which determine the shape of the AD curve which is downward sloping
12) Option E
Increase in the value of dollar makes imports attractive and exports expensive so net exports fall and AD is decreased
13) Option A
LRAS does not shift when there is a price change
14) Option B
Sticky wage theory explains that input prices are hard to change frequently but output prices can change with changing market conditions.
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