When the economy is producing at full capacity, the aggregate supply curve becomes
A. horizontal.
B. upward sloping.
C. downward sloping.
D. vertical.
Answer: D
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If the combination of goods consumed at point C is preferred to combination D then
A) point C is on a higher indifference curve. B) point C is on the same indifference cure but at a point where the vertical axis value is greater than point D's vertical axis value. C) point C is on a lower indifference curve. D) point C is on the same indifference curve but at a point where the horizontal axis value is greater than point D's horizontal axis value.
The GDP gap is:
a. the product of the potential real GDP and the equilibrium level of real GDP. b. the distance between the current level of real gross domestic product and full employment real GDP. c. the difference between potential real GDP and the equilibrium level of real GDP. d. the difference between the present value of all of government's projected financial obligations and the present value of all projected future tax and other receipts. e. the difference between the actual output of an economy and its potential output.
If the value of a nation's merchandise exports exceeds merchandise imports, the nation is running a
a. capital account deficit. b. capital account surplus. c. balance of trade surplus. d. balance of trade deficit.
Answer the following questions true (T) or false (F)
1. Market equilibrium occurs where the quantity supplied is equal to the quantity demanded. 2. If the demand for a product increases and the supply of the same product increases, the equilibrium price will increase. 3. As the number of firms in a market decreases, the supply curve will shift to the left and the equilibrium price will rise.