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Suppose That the Money Prices of Raw Materials Increase So

question 48

Multiple Choice

Suppose that the money prices of raw materials increase so that short-run aggregate supply decreases. If the Reserve Bank does NOT respond, the higher money price of raw materials will
i. repeatedly shift the aggregate demand curve rightward and raise the price level.
ii. shift the aggregate demand curve rightward and the aggregate supply curve leftward, raising prices.
iii. result initially in lower employment and a higher price level.


Definitions:

Existing Stockholders

Individuals or entities that currently own shares in a company.

Subscription Price

The cost at which existing shareholders can buy additional shares of a company, often at a discount.

Rights Offering

A financial mechanism by which companies offer existing shareholders the right to buy additional shares directly from the company at a predetermined price, usually at a discount, before the shares are offered to the public.

Value Of A Right

In finance, the value associated with a right, such as a stock right, which is the value to buy additional shares at a discounted price.

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