Long-run aggregate supply is
A) the possible combinations of real GDP and inputs after full adjustments have been made.
B) the extraction of natural resources.
C) the real production of goods and services after full adjustments have been made.
D) all of the physical and human resources in the economy.
Answer: C) the real production of goods and services after full adjustments have been made.
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If there is a shortage in a free market, then
A) consumers will offer to pay a lower price for the good, and the price will fall toward the equilibrium level. B) consumers will offer to pay a higher price for the good, and the price will rise toward the equilibrium level. C) suppliers will decrease their output to match demand. D) suppliers will accept any price below equilibrium.
If there's unemployment in the economy, then government policy should
a. increase taxes and cut spending, which would shift AD to the left b. increase taxes and spending, which would shift AD to the left c. decrease taxes and spending, which would shift AD to the right d. decrease taxes and increase spending, which would shift AD to the right e. increase taxes and cut spending, which would shift AS to the left
In the above figure, if the price is equal to $40, there is
A. a shortage of 100 units. B. an excess quantity supplied of 100 units. C. an excess quantity demanded of 50 units. D. a surplus of 50 units.
For this question, assume that the Phillips curve equation is represented by the following equation: ?t - ?t-1 = (m + z) - ?ut. A reduction in the unemployment rate will cause
A) a reduction in the markup over labor costs (i.e., a reduction in m). B) an increase in the markup over labor costs. C) an increase in the inflation rate over time. D) a decrease in the inflation rate over time. E) none of the above