Which of the following statements concerning the aggregate demand and aggregate supply model is correct?
a. The aggregate demand and aggregate supply model is nothing more than a large version of the model of market demand and supply.
b. The price level and quantity of output adjust to bring aggregate demand and supply into balance.
c. The aggregate supply curve shows the quantity of goods and services that households, firms, and the government want to buy at each price.
d. The aggregate demand shows the quantity of goods and services that firms are willing to produce at a given price level.
b
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Generally speaking, the inclusion of transportation costs in the total costs of production has the effect of causing the LRAC curve to:
A) shift down. B) flatten out. C) shift up. D) become steeper over the range on economies of scale.
The flypaper effect is _____
a. that government grants get shifted around to other uses b. that government grants get spent on what they were intended to be spent on c. that government grants are used to lower tax rates d. that government grants are not used by local governments
Unlike implicit costs, explicit costs
a. reflect opportunity costs b. include the value of the owner's time c. are not included in a firm's accounting statements d. are actual cash payments e. do not change as a firm's output changes
You have data for compensation of employees, proprietors' income, rental income, and net interest. Can you compute national income?
A) Yes, all of the components of national income are given. B) No, since data on indirect business taxes are missing. C) No, since data on corporate profits is missing. D) No, since data on the capital consumption allowance is missing. E) No, since net interest has not been adjusted for profits.