If Resource Suppliers and Demanders Find Out That the Actual

question 104

Multiple Choice

If resource suppliers and demanders find out that the actual price level exceeds the expected price level,they will take corrective actions that will:

• A)cause the economy to move away from the potential output level.
• B)raise the unemployment level above the natural rate of unemployment.
• C)shift the aggregate demand curve of an economy.
• D)shift the short-run aggregate supply curve of an economy.
• E)lower the actual price level.

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Definitions:

Coase Theorem

Under certain conditions, when externalities are present, private parties can arrive at the efficient solution without government involvement.

External Cost

External cost is a cost incurred by a third party who did not agree to the action that caused the cost, often seen in pollution or other forms of environmental impact.

MC

An abbreviation commonly used for "Marginal Cost," which refers to the additional cost incurred by producing one more unit of a good or service.

Liability Rule

A legal principle that allocates the economic burden of damages to the party responsible for causing harm.