Figure 15-3
As shown in , if people behave according to rational expectations theory, an increase in the aggregate demand curve from AD1 to AD2 will cause the price level to move
a.
directly from 100 to 105 and then remain at 105.
b.
directly from 100 to 110 and then remain at 110.
c.
from 100 to 105 initially and then eventually move back to 100.
d.
from 100 to 105 initially and then eventually move to 110.
b
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Answer the following statement(s) true (T) or false (F)
1. A doubling of all prices has the same effect on the budget line as reducing income by half. 2. If the consumer's income doubles, then his optimal purchases of all goods will double. 3. If the consumer's income and all prices simultaneously triple, then his optimum will not change. 4. The slope of the budget line always equals the consumer's marginal value. 5. The budget line illustrates the consumer's opportunities and the indifference curve illustrates the consumer's preference.
Which of the following sellers is most able to perfectly price discriminate?
A) a college or university B) the post office C) a clothing store D) a grocery supermarket
Total revenues
A) are defined as the quantity sold divided by price. B) are not the same as total receipts from the sale of output. C) equal gross revenues minus all expenses of the firm. D) equal the price per unit times the total quantity sold.
In the short-run for a purely competitive market, a manufacturer will stop production when:
a. the total revenue is less than total costs b. the contribution to fixed costs is zero or less c. the price is greater than AVC d. operating at a loss e. a and b