According to classical macroeconomic theory, if real GDP is below the full-employment level, then an increase in aggregate demand will result in which of the following changes in equilibrium?
a. Real GDP will rise, but the price level will remain constant.
b. Real GDP and the price level will both rise.
c. Real GDP will remain unchanged but the price level will rise.
d. None of the above.
c
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If government tax revenues change automatically and in a countercyclical direction over the course of the business cycle, this would be called a(n):
A. expansionary fiscal policy. B. nondiscretionary fiscal policy. C. discretionary fiscal policy. D. political business cycle.
Suppose that the elasticity of demand for a product is 4.0 and quantity demanded increases by 20%. What must the percentage decrease in price have been?
A. 5% B. 20% C. 80% D. 200%
A dictator is most likely to
A) adopt a Rawlsian social welfare function. B) maximize her own utility. C) place equal weight on everyone's utility function. D) have nontransitive preferences.
Consumer surplus describes a situation in which there is excess quantity supplied.
Answer the following statement true (T) or false (F)