Some Producers Are Chatting Over a Beer

question 24

Multiple Choice

Some producers are chatting over a beer. Which one of the following quotations refers to a movement along the supply curve?

• A)"Wage increases have forced us to raise our prices."
• B)"Our new, sophisticated equipment will enable us to undercut our competitors."
• C)"Raw material prices have sky-rocketed; we will have to pass the cost on to our customers."
• D)"We anticipate a big increase in demand. Our product price should rise, so we are planning for an increase in output."
• E)"New competitors in the industry are causing prices to fall."

Comprehend the liquidity preference theory and its implications for the money-supply curve.

Describe how changes in the money supply affect equilibrium in the money market.

Interpret the Federal Reserve's role in setting monetary policy targets.

Analyze the effect of monetary policy on aggregate demand and the slope of the aggregate-demand curve.

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Definitions:

Weekly Wage

The total amount of money or compensation paid to an employee by an employer for work performed over the course of a week.

University

An educational institution designed for instruction, examination, or both, of students in many branches of advanced learning.

Monopolistic Distributor

An intermediary that possesses the exclusive power to distribute a product or service within a particular market, influencing prices and availability.

Marginal Cost

The investment required to manufacture an extra unit of a good or service.