When the economy is operating at a point where aggregate demand equals long-run aggregate supply, it must be true that:
A. the economy is in long-run equilibrium.
B. aggregate demand also equals short-run aggregate supply.
C. prices and expected prices are the same.
D. All of these are true.
Answer: D
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What event started the Asian financial crisis in 1997?
A) Indonesia's inability to pay its debts B) devaluation of Indonesia's currency C) Thailand's inability to pay its debts D) devaluation of Thailand's currency E) devaluation of Malaysia's currency
An economy is productive efficient if it produces
A) more than enough food to feed everyone. B) more goods and services in each successive year. C) maximum output with given resources and technology. D) enough output so that no one lives in poverty.
The income effect is the
A) increase in the interest rate caused by an increase in Real GDP.
B) increase in the interest rate due to a higher expected inflation rate.
C) decrease in the interest rate due to an increase in the supply of loanable funds.
D) change in national income brought about by a change in interest rates.
E) rate of change in national income brought about by a change in the supply of money.
An improvement in technology will shift the production possibilities curve
A) to the left.
B) along the curve.
C) inward.
D) to the right.