In the aggregate expenditures diagram, the 45° line represents the equilibrium condition that
A. Y* = Y.
B. AE = C + I + G + NX.
C. I = C.
D. Y = AE.
Answer: D
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If the quantity of real GDP demanded is greater than the quantity of real GDP supplied, then
A) the economy must be producing at potential GDP. B) aggregate demand changes to restore equilibrium. C) the price level falls to restore the macroeconomic equilibrium. D) the price level rises and firms increase production. E) the price level falls and firms decrease production.
Bargaining does NOT normally occur in
A) vertical business relationships. B) wages and working conditions under a union contract. C) posted price markets. D) the legal system.
Net capital outflow equals
a. the value of domestic assets purchased by foreigners. b. the value of foreign assets purchased by domestic residents. c. the value of domestic assets purchased by foreigners - the value of foreign assets purchased by domestic residents. d. the value of foreign assets purchased by domestic residents - the value of domestic assets purchased by foreigners.
Competitive markets usually promote the efficient use of resources. This is because
A. resource owners bear the wealth effects of their decisions. B. markets usually make equitable choices first. C. consumers price makers D. managers always have the proper incentives to make decisions.