If the average interval between firms' price adjustments is relatively short
A. a reduction in aggregate demand will cause a relatively long-lived reduction in real Gross Domestic Product (GDP).
B. an increase in aggregate demand will cause a relatively long-lived increase in real Gross Domestic Product (GDP).
C. an increase in aggregate demand will cause a relatively short-lived increase in real Gross Domestic Product (GDP).
D. a reduction in aggregate demand will cause a relatively long-lived increase in real Gross Domestic Product (GDP).
Answer: C
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Austerity advocates argue that stimulus measures paid for with borrowed money:
A. are the best way to speed up an economic recovery. B. will lead to a reduction in the government budget deficit. C. will lead to substantial inflation and sharply higher interest rates. D. will generate substantial tax revenue for the government.
The minimum price for a good set by the government above the equilibrium price is called a:
A. price ceiling. B. price floor. C. parity price ratio. D. market-generated price.
The relationship between output growth and unemployment depends on the state of the economy.
Answer the following statement true (T) or false (F)
In a monopolistically competitive market
A) firms are price setters. B) barriers to entry are high. C) firms earn positive economic profit in the long run. D) products are undifferentiated.