The AD curve is a graph depicting the
A) relationship between the price level and the quantity of real GDP demanded.
B) relationship between the price level and potential GDP.
C) relationship between the price level and the quantity of real GDP supplied.
D) business cycle during expansions and recessions.
E) relationship between the aggregate quantity of real GDP demanded and the aggregate quantity of real GDP supplied.
A
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The entry of new firms into a monopolistically competitive industry will cause the long-run equilibrium price to rise.
Answer the following statement true (T) or false (F)
Commodity substitution bias in the CPI refers to the fact that the CPI
A) takes into account the substitution of goods by consumers when relative prices change. B) takes no account of the substitution of goods by consumers when relative prices change. C) substitutes quality changes whenever they occur without taking account of the cost of the quality changes. D) accounts for improved quality in price rises. E) substitutes relative prices for absolute prices of goods.
A recessionary gap can be closed by which of the following?
A. An increase in government spending B. A decrease in taxes C. An increase in transfer payments D. All of the choices are correct
Another term for surplus is
A. excess supply. B. equilibrium demand. C. excess demand. D. equilibrium supply.