Once Decision Makers Fully Adjust to an Increase in Prices

question 216

Multiple Choice

Once decision makers fully adjust to an increase in prices,

• A) the natural rate of unemployment will decline.
• B) competitive forces will restore the usual relationship between product prices and costs.
• C) producers' profits will exceed their normal level.
• D) producers will expand output beyond the economy's potential.

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Definitions:

Drawee Bank

The financial institution upon which a check is drawn, responsible for paying the amount specified when the check is presented.

Drawer-Drawee Relationship

The financial interaction where the drawer writes a check and the drawee bank or financial institution pays the amount.

Checking Account

A bank account that allows for easy access to funds through checks and electronic means for everyday transactions.

Creditor

An entity or person that lends money or extends credit to another party, expecting repayment in the future.