If the economy is operating way below capacity, an increase in aggregate demand causes a ________ change in the price level and ________ change in output.
A. big; big
B. small; small
C. small; big
D. big; small
Answer: C
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A financial system is a means of bringing together savers and borrowers.
Indicate whether the statement is true or false.
Stabilization policies are actions taken to bring the economy closer to full employment
Indicate whether the statement is true or false
According to the principle of diminishing marginal utility, what is the best way for a business owner to maximize the number of units sold to each customer?
a. Lower the price on the first unit. b. Lower the price on each additional unit after the first. c. Increase the number of substitutes offered at the same price. d. Increase the number of substitutes offered at a higher price.
In a hyperinflation, the economy:
A. always collapses. B. can continue to function because people build expected inflation into wages and prices. C. will slow on its own to lower inflation. D. can continue to function but people are unwilling to hold any money.