If People Respond Quickly to Policy Changes That Imply Future

question 28

True/False

If people respond quickly to policy changes that imply future inflation will increase, the short run aggregate supply curve will shift upward due to their changed expectations.

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Definitions:

Close Substitutes

Close substitutes are products or services that can serve as nearly identical alternatives for consumers, making them likely to switch if the price or quality of one changes.

MC = MR

A condition where marginal cost equals marginal revenue, often used to determine the profit-maximizing level of output in economic theory.

Monopolistically Competitive Industry

A market structure in which many firms sell products that are similar but not identical, allowing for competition based on quality, price, and marketing.

Output

The quantity of goods or services produced within a given time period.