If profits are high because the price level rose,
A) the AS curve shifts leftward.
B) it is likely the result of an increase in the real wage rate.
C) business failures rise and the quantity of real GDP supplied increases.
D) new businesses open and the quantity of real GDP supplied increases.
E) potential GDP must be decreasing.
D
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The ________ is the interest rate commercial banks pay to the Fed; the ________ is the interest rate commercial banks charge each other for short-term loans.
A. nominal interest rate; real interest rate B. federal funds rate; discount rate C. nominal interest rate; prime rate of interest D. discount rate; federal funds rate
Which of the following is NOT a simplifying assumption in the simple Keynesian model?
A) There is no foreign trade. B) Net investment and gross investment are equal. C) All profits are distributed to the business owners. D) Real disposable income equals government purchases of goods and services.
Ignoring the government and foreign sectors, there is an unplanned decrease in inventories of $200 billion at the current level of real national income of $12 trillion. From this information, we know that
A) saving equals $200 billion. B) consumption expenditures equal $12 trillion less saving less $200 billion. C) planned investment is $200 billion more than planned saving. D) planned investment is $200 billion less than planned saving.
Which of the following biases the CPI to underestimate increases in prices?
a. The substitution bias b. The quality bias c. The new outlet bias d. None of the above