If the aggregate supply curve is horizontal, an increase in aggregate demand will
A) increase both real and nominal GDP by the full multiplier effect.
B) increase nominal GDP but not real GDP.
C) increase the price level but not real GDP.
D) increase real GDP by less than the full multiplier effect because of rising prices.
A
You might also like to view...
The rules-based monetary policy that some nonactivists have proposed to maintain price stability reads this way:
A) The annual growth rate in the money supply will equal the average annual growth rate in Real GDP minus the growth rate in velocity. B) The annual growth rate in the money supply will equal the average annual growth rate in Real GDP plus the growth rate in velocity. C) The annual growth rate in the money supply will equal the average annual growth rate in Real GDP divided by the growth rate in velocity. D) The annual growth rate in the money supply will equal the average annual growth rate in Real GDP times the growth rate in velocity.
According to the quantity theory of money, inflation is caused by
A) the money supply growing slower than real GDP. B) GDP growing faster than the money supply. C) GDP growing at the same rate as the money supply. D) the money supply growing faster than real GDP.
The slippage between ________ occurs because the unemployment rate is calculated from data on the number of people employed.
A. imports and exports B. consumption and saving C. output and the unemployment rate D. supply and demand
Suppose a 10% increase in the price of steak reduces the consumption of steak by 30%. Such a price rise will induce households to spend
A. the same amount on steak as before. B. more on products that are complementary with steak. C. less of their income on steak. D. more of their income on steak.