If strong aggregate demand is pushing the economy beyond potential real GDP, which of the following must be true?
A) Expansionary monetary policies will push the economy back to the long-run Phillips curve.
B) The economy is at an equilibrium that is not on the long-run Phillips curve.
C) The economy is at an equilibrium that is on the long-run aggregate supply curve.
D) The economy is at an equilibrium that is on the long-run Phillips curve.
B
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A monopolist’s profit per unit is shown by the difference between price and average cost per unit.
Answer the following statement true (T) or false (F)
Why cannot firms leave the industry in the short run?
What will be an ideal response?
The equilibrium effects of a temporary increase in government spending include
A) an increase in the real wage and an increase in the real interest rate. B) an increase in the real wage and a decrease in the real interest rate. C) a decrease in the real wage and an increase in the real interest rate. D) a decrease in the real wage and a decrease in the real interest rate.
(Requires Appendix material) Which of the following statements is correct?
A) TSS = ESS + SSR B) ESS = SSR + TSS C) ESS > TSS D) R2 = 1 - (ESS/TSS)