In the aggregate demand-aggregate supply framework, how does an increase in the price level affect potential GDP?
What will be an ideal response?
An increase in the price level has no effect on potential GDP. Potential GDP is independent of the price level, so increases or decreases in the price level have no effect on potential GDP.
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The figure above shows the market for tires. The government has imposed a tax on tires, and the sellers pay ________ of the tax
A) $10 B) $20 C) $50 D) $60 E) $30
According to your textbook, markets tend to "clear" due to
A) the use of threat and coercion. B) the competitive bidding process. C) the intervention of expert economists. D) a well-managed national economic plan.
Why does the United States tend to use more capital-intensive methods than many other places?
a. Machinery is relatively expensive in the United States. b. Wages are relatively low in the United States. c. Labor is relatively expensive in the United States. d. Machinery is relatively scarce in the United States.
A distinguishing characteristic of public transfer payments is that:
A. there is a tax on the amount of the subsidy above a certain income level. B. the recipients make no contribution to current production in return for them. C. they are used to subsidize the major transportation carriers to reduce transportation costs. D. they are counted as part of government purchases in the calculation of the gross domestic product.