Use the figure above to answer this question. At a price level of 90
A) people will be forced to cut consumption so that aggregate demand will decrease.
B) the aggregate quantity demanded exceeds real GDP and inventories will decrease.
C) inventories increase and firms will increase production.
D) the aggregate quantity demanded exceeds real GDP, inventories increase and the price level will rise.
B
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In the above figure, tax revenue is at a maximum when the tax rate is
A) 0 percent. B) 30 percent. C) 50 percent. D) 100 percent.
In the second quarter (3-month period) of 2001, U.S. nominal GDP increased but U.S. real GDP declined. We can conclude that:
a) nominal income declined by more than personal income. b) the price level rose by more than nominal GDP. c) real wages declined by more than real GDP. d) the price level fell by more than real GDP.
Inflation reduces economic efficiency because it does each of the following except:
A. distort incentives through interaction with the tax laws. B. change relative prices. C. obscure information transmitted by prices. D. induce people to minimize cash holdings.
Which of the following is not a characteristic of a linear demand curve?
A. It has a constant elasticity. B. A higher price makes the demand more elastic. C. It has a constant slope. D. The midpoint of the demand curve is unit elastic.