If the economy is operating at full employment when its aggregate demand curve is AD2, then a further increase in consumption and investment spending will cause:
Refer to the figure above.
A. Cost-push inflation, and the new equilibrium output will be less than Q2
B. Demand-pull inflation, and the new equilibrium output will be less than Q2
C. Demand-pull inflation, and the new equilibrium output will be more than Q2
D. Cost-push inflation, and the new equilibrium output will be more than Q2
C. Demand-pull inflation, and the new equilibrium output will be more than Q2
You might also like to view...
All growth theory today is "new growth theory" because it considers a broad framework that includes technological progress
Indicate whether the statement is true or false
Firm A is a monopoly. The demand for its output is p = 90 - Q. Production is such that Q = L. Firm A hires labor in a competitive market where the wage is $10. Firm A will hire
A) 10 units of labor. B) 20 units of labor. C) 30 units of labor. D) 40 units of labor.
When marginal revenue is zero for a monopolist facing a downward-sloping straight-line demand curve, the price elasticity of demand is:
a. greater than 1. b. equal to 1. c. less than 2. d. equal to 0.
If capital and labor are perfect substitutes in a production function, the isoquants for this function will be
A. convex from above. B. concave from above. C. a straight line. D. any one of these depending on the particular combination of labor and capital employed.