Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the long run would be:
A. P1 and Y2.
B. P2 and Y2.
C. P3 and Y1.
D. P2 and Y3.
Answer: D
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The commercial banks on Sunny Island have checking deposits of $4 million, reserves of $600,000, and loans of $2.4 million. The desired reserve ratio is 10 percent. The banks have ________ of desired reserves and ________ of excess reserves
A) $600,000; $0 B) $400,000; $200,000 C) $400,000; $600,000 D) $600,000; $200,000
The income that includes a household's earnings in addition to cash transfers from the government is called
A) market income. B) real income. C) money income. D) cash income.
According to classical economists, the increase in unemployment in recessions is caused by
A) slack aggregate demand. B) the failure of wages to adjust to restore equilibrium in the labor market. C) the power of labor unions, which prevent firms from cutting wages. D) a mismatch of workers and jobs.
Consider a model with one endogenous regressor and two instruments. Then the J-statistic will be large
A) if the number of observations are very large. B) if the coefficients are very different when estimating the coefficients using one instrument at a time. C) if the TSLS estimates are very different from the OLS estimates. D) when you use homoskedasticity-only standard errors.