If Resource Suppliers and Demanders Find Out That Their Price

question 195

Multiple Choice

If resource suppliers and demanders find out that their price expectations were wrong,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
• D)shift the short-run aggregate supply curve
• E)raise the actual price level

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Definitions:

Deadweight Losses

Economic inefficiencies that occur when the free market equilibrium is disturbed, resulting in a loss of economic value, often due to taxes, subsidies, or price controls.

Administrative Burdens

The costs and obstacles associated with compliance to legal and regulatory requirements by businesses or individuals.

Corporate Income Tax

A tax imposed on the net income of a corporation, calculated on its net earnings.

Stockholders

Individuals or entities that own shares in a corporation, granting them certain rights and potentially a share in its profits.