Graphically long-run equilibrium occurs at the intersection of the aggregate demand curve and the:
A. short-run aggregate supply line.
B. short-run aggregate supply line and the long-run aggregate supply line.
C. expenditure line.
D. long-run aggregate supply line.
Answer: B
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The slope of the consumption function:
A. is horizontal. B. equals 1. C. equals the marginal propensity to consume. D. is vertical.
Refer to the below graph. It shows a firm which buys its inputs and sells its output in competitive markets. If the firm develops a new technology that increases labor productivity, the equilibrium level of employment for this firm is expected to be:
A. L0
B. Zero
C. Lower than L0
D. Higher than L0
Using the information in the table above, calculate the government's budget deficit or surplus
A) $2 B) -$4 C) -$10 D) $4