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Does a change in the nominal quantity of money have real effects in the new Keynesian model?
In the New Keynesian model, a change in the nominal quantity of money can have real effects, particularly in the short run. This is due to price stickiness, which means that prices do not adjust immediately to changes in the money supply. As a result, an increase in nominal money can lead to higher output and employment as firms respond to increased demand before prices fully adjust. However, in the long run, these effects dissipate as prices adjust, and the economy returns to its natural level of output.
What is markets in which firms sell their output of goods and services?
The product market is the market in which firms sell their output of goods and services.
What is the marginal physical product?
The resulting rate of change in a firms output as a result of employing one extra unit of a factor of production for example labour.
A situation where there are a few large firms and any change in one firm's output or prices will affect the whole market is known as?
oligopoly (study islands)
A Is the market supply curve for a product more or less price elastic than the supply curve of one of the firms in the market Why?
The market supply curve of a product is more price elastic than the supply curve of one of the firms in the market. The reason is that for any given price change, the market quantity response reflects the change in output of all the firms in the market.
Why does an AS curve have three ranges?
The AS curve has three ranges because of different levels of responsiveness of output to changes in price level. In the short run, firms may not be able to adjust prices quickly, leading to a horizontal range. In the intermediate range, firms can adjust prices and output, resulting in a positive sloping range. In the long run, all inputs can be adjusted, leading to a vertical range.
Does a change in the nominal quantity of money have real effects in the new Keynesian model?
In the New Keynesian model, a change in the nominal quantity of money can have real effects, particularly in the short run. This is due to price stickiness, which means that prices do not adjust immediately to changes in the money supply. As a result, an increase in nominal money can lead to higher output and employment as firms respond to increased demand before prices fully adjust. However, in the long run, these effects dissipate as prices adjust, and the economy returns to its natural level of output.
What is markets in which firms sell their output of goods and services?
The product market is the market in which firms sell their output of goods and services.
According to aggregate supply curve what happens as the price level increases?
firms have more of an incentive to increase output
A situation where there are a few large firms and any change in one firm's output or prices will affect the whole market is known as?
oligopoly (study islands)
What is the marginal physical product?
The resulting rate of change in a firms output as a result of employing one extra unit of a factor of production for example labour.
A Is the market supply curve for a product more or less price elastic than the supply curve of one of the firms in the market Why?
The market supply curve of a product is more price elastic than the supply curve of one of the firms in the market. The reason is that for any given price change, the market quantity response reflects the change in output of all the firms in the market.
What outlets do firms have to sell their output?
business markets and consumer markets
What is the factor substitution effect?
The factor substitution effect refers to the change in the amount of one factor of production (like labor or capital) used in response to a change in its relative price, while keeping the output level constant. When the price of one factor decreases, firms may substitute that factor for another, leading to a reallocation of resources to maintain cost efficiency. This effect is crucial in understanding how firms adjust their production processes in response to changes in factor prices, influencing overall economic efficiency.
What is revenue cost?
the revenue of the firm is the money received that a firms get from selling its output.
What is the definition of expanding industry?
An industry whose firms earn economic profits and for which an increase in output occurs as new firms enter the industry.
What happens to a firms output when it increases its inputs?
generally it increases, however, there are some cases where the output actually decreases or remains the same.
