If the price level falls as real GDP decreases, the multiplier effects of any given change in aggregate expenditures are smaller than they would be if the price level remained constant
a. True
b. False
Indicate whether the statement is true or false
True
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The above figure illustrates the labor market for fast food restaurants in a small city in Peru. What would be the effects of a minimum wage imposed at $4 per hour?
A) a shortage of 200 hours B) a shortage of 100 hours C) a surplus of 200 hours D) nothing because the minimum wage has no effect on the equilibrium price and quantity
The demand for desserts tends to be more inelastic than the demand for red velvet cake
a. True b. False Indicate whether the statement is true or false
When the price of a perfectly competitive firm's output rises:
A. the firm will produce more. B. the firm's marginal cost curve will shift to the left. C. the firm's marginal cost curve will shift to the right. D. the firm will produce less.
Suppose that there are two types of houses for sale: those with solid foundations and those with cracked foundations. In all other respects, the two types of houses are identical. Houses with solid foundations are worth $200,000, while those with cracked foundations are worth $200,000 minus the $20,000 to fix the crack, or $180,000. Sellers know which type of house they have, but buyers cannot detect whether the foundation has a crack. Suppose that 80 percent of the houses for sale have a solid foundation and 20 percent of the houses for sale have a cracked foundation. If some of the owners of houses with solid foundations remove their houses from the market because they can't sell their house for a price that is as high as the value of their house, then:
A. the average sales price of a house will rise. B. buyers' reservation prices will rise. C. the owners of houses with a cracked foundation will also take their houses off the market. D. the proportion of homes for sale with a cracked foundation will rise.