In long-run macroeconomic equilibrium
A) real GDP equals potential GDP.
B) the price level is fixed and aggregate demand determines real GDP.
C) real GDP and the price level are determined by short-run aggregate supply and aggregate demand and long-run aggregate supply is irrelevant.
D) real GDP is less than potential GDP.
A
You might also like to view...
A firm has to decide between two projects that cost $10,000 each. Project A will provide a revenue $10,700 one year from now, while Project B will provide a revenue of $12,200 two years from now. The interest rate is 10% per year. This firm
A) chooses project A. B) chooses project B. C) rejects both projects. D) is indifferent between projects A and B.
Many mining and mineral extraction processes tend to exhibit increasing returns to scale
Suppose copper mines have increasing returns, and the existing copper mines reduce their capital and labor inputs by 25 percent in response to a global recession. What is the expected impact on copper output? A) Output increases by less than 25 percent B) Output decreases by less than 25 percent C) Output decreases by exactly 25 percent D) Output decreases by more than 25 percent
According to economic theory, how do people make decisions?
A) They make decisions in the same manner as their parents did. B) They make decisions by looking at what others have done in the same situation and then doing the opposite. C) They make decisions by looking at what others have done in the same situation and then doing the same. D) They make decisions based on their own self-interest.
For those who favor an active approach, public policy changes are necessary to cure a recessionary gap because: a. the short-run aggregate supply curve will otherwise shift quickly to the right
b. prices and wages are flexible downward but not upward. c. the required decrease in output can be achieved only by shifting the aggregate demand curve. d. real wages must fall in order to increase aggregate supply in the economy. e. falling money wages will cause the AD curve to shift leftward unless policy counters this movement.