If a price ceiling were established above the equilibrium price,
A) it would have no effect on the quantity demanded.
B) it would create a shortage.
C) it would create a surplus.
D) none of the above.
Answer: A
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Refer to the above figure. If the price level is 80
A) the total planned real expenditures by individuals, businesses, and the government are less than total planned production by firms. B) the aggregate demand curve will automatically shift leading to a stable equilibrium. C) the economy will have economic growth and the new equilibrium price level will be 80. D) the total planned real expenditures by individuals, businesses, and the government exceed total planned production by firms.
The above figure shows a consumption function and a 45-degree line. Real consumption is a function of disposable income
Why is real GDP used here instead? What is measured along the vertical axis? What is measured by point B? Explain the significance of point A.
A firm deciding how many hours to hire can be represented:
A. with an individual labor-supply curve. B. in the market labor-demand curve. C. with an individual labor-demand curve. D. in the market labor-supply curve.
Suppose the central bank implements expansionary monetary policy where the money supply increases. Which of the following will tend to occur in the long run as a result of this monetary policy action?
A. Output will increase with no change in the price level. B. Output and the price level will both increase. C. an increase in the price level and no change in output D. no change in either the price level or output