Suppose That More Police and Security Workers Become Aware That

question 28

Multiple Choice

Suppose that more police and security workers become aware that wearing bulletproof vests can protect them from injury and decide to start wearing bulletproof vests.At the same time,the price of ceramics used to produce the vests falls.The equilibrium price of bulletproof vests _____ and the equilibrium quantity produced _____.

• A)increases;increases
• B)decreases;decreases
• C)probably changes,but in an ambiguous direction;probably changes,but in an ambiguous direction
• D)probably changes,but in an ambiguous direction;increases

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Definitions:

Inflation

The rate at which the general level of prices for goods and services rises, eroding purchasing power.

Deflation

A decrease in the general price level of goods and services, often resulting in increased purchasing power of the currency.

Full Employment

An economic situation where all available labor resources are being used efficiently and there is no cyclical unemployment, implying a low, stable rate of unemployment.

Aggregate Supply

The aggregate output of goods and services generated inside an economy, measured at a specific price level over a designated time frame.