The aggregate supply curve will be horizontal if
A. there is no cyclical unemployment.
B. the economy is operating with considerable idle capacity.
C. the economy is close to full employment.
D. the economy is producing real GDP in excess of its potential.
B. the economy is operating with considerable idle capacity.
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A decrease in demand and an increase in supply will lead to
A) unambiguous increases in both price and quantity. B) unambiguous decreases in both price and quantity. C) an unambiguous decrease in price, but the effect on quantity is indeterminate. D) an unambiguous decrease in quantity, but the effect on price is indeterminate.
Economic choices or tradeoffs are the result of: a. human greed
b. scarcity. c. poverty. d. private ownership of resources.
The extent to which investment spending changes with changes to income is called? the:
A) marginal propensity to consume.
B) marginal propensity to save.
C) marginal propensity to import.
D) marginal propensity to invest.
"It is clear from the theory of monopolistic competition that product development is not pushed to its efficient level." This statement is
A) false because there is so much product differentiation in monopolistic competition. B) true because there is little incentive to innovate in monopolistic competition. C) false because there are so many wasteful innovations in monopolistic competition that are merely cosmetic. D) true because price exceeds marginal revenue in monopolistic competition.