If a decrease in net taxes in the United States resulted in a very large increase in aggregate output and a very small increase in the price level, then the U.S. economy must have been
A. on the very flat part of the short-run aggregate demand curve.
B. on the very steep part of the short-run aggregate demand curve.
C. on the very steep part of the short-run aggregate supply curve.
D. on the very flat part of the short-run aggregate supply curve.
Answer: D
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If the inputs to a production process are perfect complements, the firm can choose from a virtually infinite array of combinations of the two inputs to minimize the costs of producing a given level of output
Indicate whether the statement is true or false
Product differentiation always exists in
A) perfect competition. B) monopolistic competition. C) oligopoly. D) monopoly.
Inflation
a. causes people to spend more time reducing money balances. When inflation is unexpectedly high it redistributes wealth from lenders to borrowers. b. causes people to spend more time reducing money balances. When inflation is unexpectedly high it redistributes wealth from borrowers to lenders. c. causes people to spend less time reducing money balances. When inflation is unexpectedly high it redistributes wealth from lenders to borrowers. d. causes people to spend less time reducing money balances. When inflation is unexpectedly high it redistributes wealth from borrowers to lenders.
The economy is initially in long-run equilibrium. Expectations are adaptive, prices and wages are flexible, and there is an unanticipated increase in aggregate demand. In the short run, the price level will be __________ than it was in long-run equilibrium and Real GDP will be __________ than it was in long-run equilibrium
A) higher; lower B) lower; higher C) lower; lower D) higher; higher