Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the long run would be:
A. P2 and Y2.
B. P1 and Y2.
C. P4 and Y2.
D. P1 and Y1.
Answer: B
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A) less than if that event was unanticipated B) greater than if that event was unanticipated C) the same as would develop if that event was unanticipated D) independent of whether or not that event is anticipated or unanticipated
Describe appropriate discretionary fiscal policy according to Keynesian economics to smooth out the business cycle
As inflation rates increase, borrowing and lending contracts tend to
a. increase in size. b. decrease in size. c. decrease in length of time. d. increase in length of time.
The general term for market structures that fall somewhere between monopoly and perfect competition is
a. incomplete markets. b. imperfectly competitive markets. c. oligopoly markets. d. monopolistically competitive markets.