The intersection of the aggregate demand and aggregate supply curves determines the:
A. per-unit cost of production in the economy.
B. equilibrium level of real domestic output and prices.
C. shape of the aggregate demand curve.
D. shape of the aggregate supply curve.
Answer: B
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The aggregate expenditure model focuses on the ________ relationship between real spending and ________.
a. short-run; real GDP b. short-run; inflation c. long-run; real GDP d. long-run; inflation
Which of the following conditions is not necessary for a firm to be able to engage in price discrimination?
I. The firm must be able to produce to the point at which price equals marginal revenue. II. The firm must easily be able to identify consumers with different demand elasticities. III. The firm must be able to prevent resale of the item it produces and sells. A) I only B) III only C) Both I and II only D) Both II and III only
The real interest rate is
a. the premium that borrowers must pay in order to acquire more purchasing power. b. the reward lenders receive in exchange for their willingness to delay consumption into the future. c. equal to the money interest rate minus the inflationary premium. d. all of the above.
According to Keynesian theory, the correct fiscal policy action to stimulate the economy would be to:
A. Raise taxes to increase aggregate demand. B. Increase the money supply to increase aggregate supply. C. Increase government expenditures to increase aggregate demand. D. Increase education spending to increase aggregate supply.