Using Figure 2 above, suppose that the economy started at PAE2. A potential change that could cause the economy to go from PAE2 to PAE3 might be:
A. taxes increase.
B. interest rates increase.
C. wealth level increases.
D. domestic income increases.
Answer: C
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Which of the following is the primary source of rapid growth in the real earnings of workers?
a. increases in the minimum wage b. government regulation of labor markets c. strong unions d. rapid growth in worker productivit
With increasing returns (falling average costs), as the remaining firms expand, their demand curves become _______________ due to foreign competition, and firms must _______________.
a. steeper; raise prices b. flatter; lower prices c. flatter; raise prices d. steeper; lower prices
How did the Great Depression affect economists' beliefs about the macroeconomy?
What will be an ideal response?
Which of the following pricing strategies does NOT usually enhance the profits of firms with market power?
A. Price matching B. Marginal cost pricing C. Cross-subsidies D. Two-part pricing