How does an increase in autonomous expenditure change real GDP in the short run? Does real GDP change by the same amount as the change in aggregate demand? Why or why not?
What will be an ideal response?
In the short run, an increase in aggregate expenditure increases real GDP. However, the increase in real GDP is less than the increase in aggregate demand because the price level rises. The more the price level rises (the steeper the SAS curve) the smaller the increase in real GDP.
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The value of the best thing that a person must give up when making a decision is known as the ________ cost
A) opportunity B) sunk C) benefit D) explicit E) direct
Refer to Figure 12-15. Suppose a typical firm in a perfectly competitive market is earning economic profits in the short run. Which of the diagrams in the figure depicts what happens in the industry as it transitions to a long-run equilibrium?
A) Panel A B) Panel B C) Panel C D) Panel D
In the short run, marginal cost is minimized when
A) MPL is maximized. B) MPL equals zero. C) APL is maximized. D) APL equals zero.
A basic problem with the infant-industry argument is that
a. most industries need protection when they are mature, not when they are first established. b. the amount of the tariff is unlikely to have much impact on the success of an infant industry. c. political pressure will likely prevent the withdrawal of the tariff when the industry matures. d. domestic consumers will continue to buy the foreign products anyway, regardless of the tariff.