Economic growth will be associated with a constant price level when
A. the increase in aggregate demand is less than the increase in long-run aggregate supply.
B. the increase in aggregate demand is more than the increase in long-run aggregate supply.
C. the increase in aggregate demand is accompanied by a reduction in short-run aggregate supply.
D. the increase in aggregate demand exactly equals the increase in long-run aggregate supply.
Answer: D
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If sugar and Nutrasweet are substitutes, then we can be certain that an increase in the price of sugar will lead to an increase in the consumption of:
A. sugar only. B. Nutrasweet only. C. sugar and Nutrasweet. D. None of the statements is correct.
The shutdown condition for a firm is to
A. shutdown if price is less than marginal revenue. B. shutdown if losses are made. C. shutdown if price is less than Average Variable Cost. D. shutdown if price is less than Average Total Cost.
A transfer payment is the revenue one receives when filing for a tax refund.
Answer the following statement true (T) or false (F)
A senator states: "We need to cut taxes in order to increase incentives to work and produce, so that we can pull the nation out of this economic slump." A mainstream economist who is a critic of this policy would likely reply that:
A. Rather than cutting taxes there should be a decrease in government spending to address the problem B. Rather than cutting taxes, monetary policy should become tighter to control the inflation rate C. Increasing government spending is a surer way to increase production and pull the nation out of this economic slump D. Cutting taxes will only reduce output further, and aggravate the situation