How can the long-run equilibrium level of real Gross Domestic Product (GDP) increase without the price level changing?
What will be an ideal response?
Since the long-run aggregate supply curve is vertical, the only way real Gross Domestic Product (GDP) can increase without the price level changing is if aggregate demand increases and long-run aggregate supply increases. For the latter to happen, either the endowment of inputs must increase or technology must change.
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About 46 percent of M1 is composed of
A) demand deposits. B) money market mutual funds. C) savings deposits. D) currency held by the public.
Suppose there are no recurring fixed costs and the daily production process for all identical firms in a perfectly competitive industry has decreasing returns to scale throughout. Then each firm will only produce a single good each day when the industry is in long run equilibrium.
Answer the following statement true (T) or false (F)
When the rate of cyclical unemployment is zero, the
a. natural rate of unemployment must also be zero b. rate of frictional unemployment must be negative c. economy must have entered a recessionary stage d. Keynesian aggregate supply curve must be horizontal e. economy is considered to be at full employment
The expansionary phase of the business cycle is characterized by
a. decreasing real output and increasing unemployment. b. decreasing real output and declining unemployment. c. increasing real output and increasing unemployment. d. increasing real output and declining unemployment.