Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the long run would be:
A. P1 and Y2.
B. P2 and Y1.
C. P3 and Y1.
D. P3 and Y2.
Answer: D
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A scatter diagram of the position of the U.S. economy from 1972 through 2007 with the price level on the vertical axis and real GDP on the horizontal axis would show a movement generally toward the
a. northwest. b. northeast. c. southwest. d. southeast.
The economy’s self-correcting mechanism to eliminate a recessionary gap relies on
A. falling interest rates that shift the aggregate demand curve outward. B. falling wage rates that shift the aggregate supply curve outward. C. rising wage rates that shift the aggregate supply curve inward. D. increases in the price level that shift the aggregate supply curve inward.
Use the following diagram to answer the next question.
Suppose the economy currently can be described by NX3. What can we conclude?
A. Both imports and exports are negative. B. Exports are negative and imports are positive. C. The value of exports exceeds the value of imports. D. The value of imports exceeds the value of exports.
Suppose a monopolist has marginal cost of zero but recurring fixed costs. Then the monopolist will produce the efficient level of output so long as he can first degree price discriminate.
Answer the following statement true (T) or false (F)