Traditional Keynesian economists believed that:
a. the aggregate supply curve is a vertical line at a fixed level of prices.
b. an increase in aggregate demand would cause a change in the price level.
c. the government should take an active role in the economy to restore equilibrium.
d. changes in aggregate demand does not determine equilibrium real GDP.
e. the private sector is not an important source for shifts in aggregate demand.
c
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Consumer surplus is the value of a good minus the cost of producing it, summed over the quantity bought
Indicate whether the statement is true or false
The natural rate of unemployment is higher in Europe than in the U.S. due to ________
A) the greater relative strength of American unions B) the greater relative generosity of U.S. unemployment benefits C) the greater severity of the business cycle in Europe relative to the U.S. D) stricter European work rules
In the long run, does it matter whether a policy action was anticipated or not?
What will be an ideal response?
As the economy recovers from a recession, we should expect that demand for:
A. inferior goods will fall and demand for normal goods will rise. B. all goods will rise. C. inferior goods will rise and demand for non-inferior goods will fall. D. all goods will fall.