In the short run, the intersection of the aggregate demand and the short-run aggregate supply curves,
A) determines the equilibrium price level.
B) is a point where there is neither a surplus nor a shortage of goods.
C) determines the equilibrium level of real GDP.
D) All of the above answers are correct.
D
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Fractional reserve banking is the system that
A) allows banks not to insure their deposits. B) allows banks not to join the Federal Reserve System. C) limits banks' activities from crossing state lines. D) allows banks to keep smaller reserves than their deposits.
Marginal utility is defined as
A. the number of units consumed divided by the total utility. B. the total utility divided by the total number of units consumed. C. the increase in utility divided by the total number of units consumed. D. the change in total utility divided by the change in number of units consumed.
In the long run, a monopolistic competitor
A) sets MR = MC. B) produces where P = AC. C) sets P > MC. D) All of the above.
The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.