Potential GDP
A) might either increase or decrease as the price level increases, depending on whether aggregate demand increases or decreases.
B) decreases as the price level increases because people demand fewer goods and services.
C) is independent of the price level.
D) increases as the price level increases because firms supply more goods and services.
E) never changes.
C
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To find the cost of the CPI market basket in the base period prices we have to multiply the
A) quantities in the CPI market basket by the base period prices and then multiply by 100. B) quantities in the CPI market basket by the base period prices. C) current period quantities in the CPI market basket by the current period prices. D) quantities in the CPI market basket by the current period prices. E) current period quantities in the CPI market basket by the base period prices.
The government can turn a shortage of a good into a surplus by
A) imposing a sufficiently low ceiling price. B) offering subsidies to producers. C) persuading producers to increase the amount of the good available. D) supporting the price of the good above the market clearing level.
The marginal seller is the seller who
a. cannot compete with the other sellers in the market. b. would leave the market first if the price were any lower. c. can produce at the lowest cost. d. has the largest producer surplus.
Figure 9.3Figure 9.3 shows the cost structure of a firm in a perfectly competitive market. If the market price is $3 and the firm produces the output where MR = MC, its profit is:
A. -$300. B. -$600. C. -$900. D. -$1,200.