Along the classical or vertical range of the aggregate supply curve, an increase in the aggregate demand curve will increase:
A. both the price level and real GDP.
B. only real GDP.
C. only the price level.
D. real GDP and reduce the price level.
Answer: C
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As the economy enters an expansion so that people's expected future incomes rise, there will be
A) a decrease in the nominal interest rate. B) a leftward shift in the supply of loanable funds curve. C) an increase in the supply of loanable funds. D) a leftward shift in the demand for loanable funds curve. E) None of the above answers is correct.
The knowledge and skills people accumulate through experience, education, and training is called
A) physical capital. B) human capital. C) economic investment. D) spillover benefits.
In an oligopoly with a collusive agreement, the total industry profits will be smallest when
A) all firms comply with the agreement. B) one firm cheats on the agreement and the other firms do not cheat. C) all firms cheat on the agreement. D) the firms act as a monopoly.
According to the traditional Keynesian school of thought, expansionary fiscal and monetary policy will: a. increase interest rates, thereby shifting the investment function to the right. b. reduce both consumption and investment spending, thereby eliminating all inflationarypressures
c. reduce investment spending, thereby stabilizing the aggregate supply shocks. d. stimulate both consumption and investment spending, thereby increasingaggregate demand. e. shift the aggregate demand curve to the left, thereby reducing the unemployment rate.