The aggregate demand curve is
A. U Shaped
B. Horizontal
C. Vertical
D. Downward sloping
It's D. Downward sloping
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The assumption of diminishing returns in the Heckscher-Ohlin model means that, unlike in the Ricardian model, it is likely that
A) countries will not be fully specialized in one product. B) countries will benefit from free international trade. C) countries will consume outside their production possibility frontier. D) comparative advantage will not determine the direction of trade. E) global production will decrease under trade.
Which of the following would cause prices and real GDP to rise in the short run?
a. Short-run aggregate supply shifts right. b. Short-run aggregate supply shifts left. c. Aggregate demand shifts right. d. Aggregate demand shifts left.
Refer to the figure above. The economy is at equilibrium at point A. What fiscal policy would be most appropriate to control demand-pull inflation?
a. Shift aggregate demand by decreasing taxes b. Shift aggregate demand by increasing government spending c. Shift aggregate demand by increasing taxes d. Shift aggregate supply by increasing taxes
What is the difference between positive analysis and normative analysis?
What will be an ideal response?