Suppose that the current price level is 110, real GDP is $100 billion, and long-run aggregate supply is $95 billion. We can conclude that
A. aggregate demand will increase until both short-run and long-run aggregate supply equal $100 billion.
B. the price level will fall and input prices will rise until real GDP pulls long-run aggregate supply up to $100 billion.
C. input prices will rise until real GDP is $95 billion.
D. the price level will fall until long-run aggregate supply shifts to $100 billion.
Answer: C
You might also like to view...
If the price of TVs produced by XYZ-TV Company falls from $1,000 to $750 per TV set, then the:
A. supply of labor to the XYZ-TV Company increases. B. demand for labor by the XYZ-TV Company increases. C. supply of labor to the XYZ-TV Company decreases. D. demand for labor by the XYZ-TV Company decreases.
Many middle-to-older-aged men now claim they "need" Viagra (the male impotency wonder drug) for an enjoyable sex life. The economic way of thinking predicts
A) more men would be likely to claim they need Viagra if the price per pill were much lower (say two cents each) compared to the current price. B) fewer men would be likely to claim they need Viagra if the price per pill were much higher (say, two hundred dollars each) compared to the current price. C) other things constant, more prescriptions would be written if the price of Viagra falls significantly. D) other things constant, fewer prescriptions would be written if the price of Viagra rises significantly. E) all of the above are true.
Classical economists believed that the economy would always return to full employment
a. True b. False
Which of the following statements does not help to explain why government drug interdiction increases drug-related crime?
a. The demand for illegal drugs is inelastic. b. Interdiction results in drug addicts having a greater need for quick cash. c. Interdiction results in an increase in the amount of money needed to buy the same amount of drugs. d. Government drug programs are more lenient now with drug offenders than they were in the 1980s.