If the economy experiences inflation and economic growth, this means that aggregate demand grows by more than aggregate supply.
Answer the following statement true (T) or false (F)
True
You might also like to view...
If the quantity of real GDP demanded is less than the quantity of real GDP supplied, then
A) the economy must be producing at potential GDP. B) the price level falls and firms decrease production. C) the price level falls and firms increase production. D) the price level rises to restore the macroeconomic equilibrium. E) aggregate demand changes to restore the equilibrium.
For an oligopoly, when the quantity effect outweighs the price effect, firms may have the incentive to:
A. increase output. B. decrease output. C. not change the level of output. D. leave the industry.
If an item has several good substitutes, the demand curve for that item is likely to be
A) relatively inelastic. B) relatively elastic. C) perfectly inelastic. D) unit elastic.
Can the Fed manage the federal funds rate?
a. No. It's the rate determined by banks that lend and borrow from each other b. No. It's the rate determined by government c. Yes. They do so by engaging in open market operations d. Yes. They do so by manipulating the discount rate e. Yes. They do so by manipulating the legal reserve requirement