Increased levels of consumption:
a) Shift aggregate supply outwards so more is supplied at each price
b) Shift aggregate supply inwards so less is supplied at each price
c) Shift aggregate demand outwards so more is demanded at each price
d) Shift aggregate demand inwards so less is demanded at each price
Answer: c) Shift aggregate demand outwards so more is demanded at each price
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The long-run average cost curve is U-shaped because of which of the following?
A) decreasing marginal returns as more labor is hired B) constant fixed costs as output is increased C) economies and diseconomies of scale D) increasing marginal returns as more labor is hired E) decreasing average fixed costs as output is increased
The expectations theory and the segmented markets theory do not explain the facts very well, but they provide the groundwork for the most widely accepted theory of the term structure of interest rates
A) the Keynesian theory. B) the separable markets theory. C) the liquidity premium theory. D) the asset market approach.
If prices in the New Keynesian model were perfectly flexible, then
A) there would be a role for monetary policy. B) the output gap would be positive. C) the equilibrium real interest rate would be the natural rate of interest. D) the output gap would be negative.
The trade in goods, services, and capital around the world comprises:
A. trillions of dollars. B. billions of dollars. C. a small amount in dollar value. D. millions of dollars.