Using Figure 8.5, if the equilibrium price level is P1, then aggregate demand is
A. AD2, and the equilibrium output level is Q2.
B. AD2, and the equilibrium output level is Q1.
C. AD1, and the equilibrium output level is Q2.
D. AD1, and the equilibrium output level is Q3.
Answer: C
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If the Japanese government enters the foreign exchange market and purchases yen to maintain a specific exchange rate with the dollar, the dollar will ________ and the yen will ________
A) depreciate; depreciate B) depreciate; appreciate C) appreciate; depreciate D) appreciate; appreciate
The more firms there are in an oligopoly in which the strategic firm variable is quantity, the more price converges to marginal cost.
Answer the following statement true (T) or false (F)
If a country’s GDP increases, but its debt decreases during that year, what will happen to the country’s debt to GDP ratio for the year in proportion to the magnitude of the changes?
a. Increase or decrease b. Decrease because its debt decreased c. Increase because GDP increased d. Decrease
Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the real GDP and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. Real GDP falls, and reserve-related (central bank) transactions remain the same. b. Real GDP and reserve-related (central bank) transactions remain the same. c. Real GDP rises, and reserve-related (central bank) transactions remain the same. d. There is not enough information to determine what happens to these two macroeconomic variables.