Assume the overall price level changes, ceteris paribus. Considering this, which of the following accurately explains a difference between the short-run aggregate supply (SRAS) curve and the long-run aggregate supply (LRAS) curve?
a. There is movement along the SRAS curve but not the LRAS curve.
b. The quantity of real GDP supplied changes for the LRAS curve but not for the SRAS curve.
c. Both the SRAS curve and the LRAS curve shift.
d. The quantity of real GDP supplied changes for the SRAS curve but not for the LRAS curve.
d. The quantity of real GDP supplied changes for the SRAS curve but not for the LRAS curve.
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Refer to Table 5.1. Hector has a comparative advantage in the production of
A) bracelets. B) tiaras. C) both products. D) neither product.
When someone stops mowing his own lawn and hires a lawn service to mow it for him, what happens to GDP? (Assume that the lawn service reports its income to the IRS.)
A. It falls because hiring a lawn service reduced the amount of other goods that the person could purchase. B. It rises because GDP includes the value of the additional leisure time that the person gets by hiring someone else. C. Nothing; the same lawns are being mowed, so production has not changed. D. It rises because when the person used to mow his own lawn it was a nonmarket production, which is not counted, but the hiring of the lawn service is counted in the GDP.
If the marginal propensity to save (MPS) is 0.1, the spending multiplier will be
A. 1.1. B. 10. C. 0.9. D. 0.1.
Refer to the above below graph. This monopolistic ally competitive firm is earning economic profits in the short run and:
The graph depicts a monopolistic ally competitive firm.
A. Will continue to have economic profits in the long run
B. Will earn only normal profits in the long run
C. This will cause its demand curve to shift to the right in the long run
D. This will cause its cost curves to rise in the long run