An increase in aggregate supply (shift to the right) will cause the price level to
a. rise and real GDP to rise
b. rise and real GDP to fall
c. rise and the unemployment rate to fall
d. fall and real GDP to rise
e. fall and the unemployment rate to rise
D
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Suppose firms in Hong Kong can produce 40,000 plastic dolls or 80,000 squirt guns each week, while firms in Taiwan can produce 40,000 plastic dolls or 40,000 squirt guns each week. Therefore
A) People in Hong Kong sacrifice two dolls for every squirt gun produced. B) People in Taiwan sacrifice two dolls for every squirt gun produced. C) People in Hong Kong sacrifice 2 squirt guns for every doll produced. D) none of the above are true.
If a competitive price-taker firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then
a. average revenue exceeds marginal cost. b. the firm is earning a positive profit. c. a one-unit decrease in output would increase the firm's profit. d. All of the above are correct.
If there is 2 percent frictional unemployment, 3 percent structural unemployment, and 1 percent cyclical unemployment, then the natural rate of unemployment equals:
A. 3%. B. 6%. C. 4%. D. 5%.
According to the structural stagnation hypothesis, expansionary macro policy tends to lead to:
A. goods inflation. B. goods deflation. C. low exchange rates. D. asset price inflation.