If there is an inflationary spiral, GDP will fall as inventories rise.
Answer the following statement true (T) or false (F)
False
An inflationary spiral results from the opposite. The AD curve intersects the AS curve to the right of full employment, leading to a depletion of inventory levels. Costs and prices rise as firms attempt to restore inventory levels.
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Refer to Figure 2.1. At point D, demand is:
A) completely inelastic. B) inelastic, but not completely inelastic. C) unit elastic. D) elastic, but not infinitely elastic. E) infinitely elastic.
Piece rate pay is
a. Compensation per dollar of profit of the company b. Compensation per dollar of profit of the division c. Compensation per piece a worker produces d. Compensation per dollar of sales
Assume the MPC is 0.75, taxes increase by $100 billion, and government spending increases by $100 billion. Aggregate demand will
A. Increase by $100 billion. B. Decrease by $400 billion. C. Increase by $400 billion. D. Not change.
The effect of diminishing marginal returns outweighing the effect of spreading out the fixed costs is illustrated by the ________ average cost curve ________.
A. long-run; decreasing B. long-run; increasing C. short-run; decreasing D. short-run; increasing