Assume that autonomous expenditures in an economy decreased by $10 billion. What is the change in aggregate demand at a given price level if the MPC is 0.5?
a. increase by $50 billion
b. increase by $10 billion
c. decrease by $20 billion
d. decrease by $10 billion
c
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Use the following graph to answer the next question.
The perfectly competitive firm's supply curve is the
A. MC curve at and above G. B. MC curve at and above F. C. MC curve at and above H. D. MC curve at and above J.
If the opportunity cost of producing cheese is higher in Greece than it is in Italy, then:
a. Greece should specialize in producing cheese. b. Italy should specialize in producing cheese. c. both Greece and Italy should produce cheese. d. Greece gives up fewer goods to produce cheese than Italy does. e. Italy has a better economy than Greece.
When an economy is experiencing a negative output gap, it means that the:
A. actual output is less than their potential output. B. actual output is more than their potential output. C. price level is rising. D. price level is falling.
On which point on the graph above should the economy operate if it wants to maximize its future production possibilities?
a. A b. B c. C d. D