Most economists agree that the aggregate demand curve is:
A. vertical.
B. horizontal.
C. relatively steep.
D. relatively flat.
Answer: C
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When there is a shift in autonomous expenditure, why is there a multiple expansion of income and real GDP? Trace the multiplier effect through the first four rounds when there is an increase in autonomous expenditure of $40 billion and the marginal propensity to consume is 0.75
If each taxpayer is obliged to pay the same tax—a fixed sum of money—then the tax is
a. progressive b. proportional c. income based d. poll or head based e. excise based
In monopolistic competition, a firm has a limited degree of "price-making" ability. This means that the firm will
A. set price above marginal cost. B. set price equal to marginal cost. C. always earn an economic profit. D. produce at minimum average total cost.
In the traditional Keynesian model, an increase in taxes leads to all of the following EXCEPT
A. an increase price level. B. a decrease in consumption. C. a decrease in aggregate demand. D. lower real GDP.