What is the best explanation for the slope of the Keynesian zone of the aggregate supply curve?
A. an increase in aggregate demand causes both real output and the price level to increase.
B. an increase in aggregate demand when the economy is operating below potential output causes real output to grow, with little or no effect on the price level.
C. an increase in aggregate demand when the economy is operating at potential output causes the price level to rise, with little or no effect on real output.
Ans: B. an increase in aggregate demand when the economy is operating below potential output causes real output to grow, with little or no effect on the price level.
You might also like to view...
Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as 
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting upward C. Short-run aggregate supply shifting downward D. Aggregate demand shifting leftward
Most of the day-to-day power in monetary policy decisions lies with
A) the President of the United States. B) the Senate Banking Committee. C) the chairman of the Board of Governors. D) large commercial banks.
Consumers receive more consumers' surplus when __________
A) tariffs exist. B) tariffs and quotas do not exist. C) quotas exist. D) a and c
One problem with the effectiveness of Pigovian taxes is:
A. the tax is always used to benefit those who bear the externalities. B. the tax does not directly compensate those who are affected by the externality. C. knowing whether to impose it on the consumer or producer. D. none of the above is a problem of Pigovian taxes.