Among the propositions of the Keynesian school of thought is
A. rational expectations.
B. aggregate supply management is the key to a stable economy.
C. economic policies are ineffective.
D. aggregate demand determines equilibrium output.
Answer: D
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Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price of a bagel ________ and the equilibrium quantity ________
A) rises; increases B) does not change; does not change C) falls; increases D) rises; decreases E) falls; decreases
If countries have similar factors of production and similar productivities, most of their trade is likely to be intraindustry
Indicate whether the statement is true or false
The desired stock of capital is that stock which
A) firms always obtain. B) corresponds to the natural level of output. C) would obtain when net investment is zero. D) firms are always adjusting toward.
At the midpoint of a linear demand curve, the elasticity of demand is
A. one. B. zero. C. greater than one. D. less than zero.