Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD1 the result in the long run would be:
A. P4 and Y1.
B. P4 and Y2.
C. P5 and Y1.
D. P5 and Y2.
Answer: D
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The substitution by consumers of one good for another because of relative price changes is:
A. not captured by the CPI and causes the CPI to overestimate the cost-of-living changes. B. captured by the CPI and causes the CPI to overestimate the cost-of-living changes. C. not captured by the CPI and causes the CPI to underestimate the cost-of-living changes. D. captured by the CPI and causes the CPI to underestimate the cost-of-living changes.
The manager of a firm operating in a competitive market can ignore sunk costs when making business decisions
a. True b. False Indicate whether the statement is true or false
Forecasts of an inevitable exhaustion of essential natural resources are “simply beside the point” because higher prices (i) reduce quantity demanded; (ii) stimulate supply; (iii) stimulate alternative technology.
A. i only. B. ii only. C. iii only. D. i, ii, and iii.
Which of the following states that any trade concession given to any foreign country must be given to all other countries having the same status?
A. The purchasing power parity theory B. The most favored nation principle C. The principle of reciprocity D. The structural adjustment program