In the above figure, if A is the initial equilibrium point and there is an unanticipated rise in aggregate demand from AD1 to AD2, then
A) the new short-run equilibrium will be at point B.
B) the new short-run equilibrium will be at point D.
C) the new long-run equilibrium will be at point B.
D) real Gross Domestic Product (GDP) per year will fall below Y1.
A
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Determining the price of compact discs is a concern of:
a. macroeconomics. b. microeconomics. c. both macroeconomics and microeconomics. d. neither macroeconomics nor microeconomics.
At a given nominal rate of interest, when spending is equal to output and there is uncovered interest parity, we have:
A) real exchange rate parity. B) equilibrium in the goods market and in the forex market. C) stable inflation and low unemployment. D) depreciation of the home currency.
How does the shape of the aggregate supply curve affect macroeconomic analysis and policymaking? Illustrate your answer with the appropriate graphs.
What will be an ideal response?
Pookie's Pinball Palace restores old Pinball machines. Pookie has just spent $300 purchasing and cleaning a 1960s-era machine which he expects to sell for $2,000 once he is finished with the restoration. After having spent $300, Pookie discovers that he
will need to rewire the entire machine at a cost of $1,100 in order to finish the restoration. Alternatively, he can sell the machine "as is" now for $1,000. What should he do? A) He should sell the machine now to make the most profit. B) It does not matter what he does; he is going to take a loss on his project. C) He should rewire the machine, complete the task and then sell the machine. D) He should have never purchased the machine because he has already spent too much time on it and has not been paid for that time.