As the price level increases, the amount of goods and services that consumers, businesses, and governments desire to purchase will change. This is depicted by:
a. a leftward movement of the aggregate demand curve
b. a rightward movement of the aggregate demand curve.
c. an upward movement along the aggregate demand curve.
d. a downward movement along the aggregate demand curve.
e. an increase in the slope of the aggregate demand curve.
c
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Why is the long-run aggregate supply curve a vertical line?
A) At that level of real GDP, the production costs are at their lowest level. B) At that level of real GDP, production costs have fully adjusted to price changes. C) At that level of real GDP, the unemployment rate is 0 percent. D) At that level of real GDP, the inflation rate is 0 percent.
Under a fixed exchange rate regime, if the domestic currency is initially overvalued, that is, below par, the central bank must intervene to purchase the ________ currency by selling ________ assets
A) domestic; foreign B) domestic; domestic C) foreign; foreign D) foreign; domestic
Which of the following statements best describes the price, output, and profit conditions of monopoly?
a. Price will equal marginal cost at the profit-maximizing level of output and profits will be positive in the long run. b. Price will always equal average variable cost in the short-run and either profits or losses may result in the long run. c. In the long run, positive economic profit will be eliminated. d. None of these.
Can central bankers set short-term interest rate targets and still control inflation in the long run or are these goals mutually impossible? Explain.
What will be an ideal response?