The long-run supply curve in a constant-cost industry would be:
A. downsloping.
B. upsloping.
C. horizontal.
D. vertical.
Answer: C
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Suppose that the marginal propensity to consume (MPC) is .75 and there is an increase in investment spending of $100,000. As a result, equilibrium real Gross Domestic Product (GDP) would increase by
A) $400,000. B) $75,000. C) $100,000. D) $750,000.
Define the three functions of money
What will be an ideal response?
If two identifiable markets differ with respect to their price elasticity of demand and resale is impossible, a firm with market power will
A) set a higher price in the market that is more price elastic. B) set a lower price in the market that is more price elastic. C) set price so as to equate the elasticity of demand across markets. D) set price equal to marginal cost in both markets.
In the classical model, how do shifts in aggregate demand affect real GDP?
A) Real GDP will remain unchanged. B) Increases in aggregate demand increase real GDP. C) Increases in aggregate demand decrease real GDP. D) Decreases in aggregate demand increase real GDP.