Which of the following is a simplifying assumption associated with the short-run Keynesian model of equilibrium real Gross Domestic Product (GDP) determination?
A) Gross private domestic investment exceeds net private domestic investment.
B) Most business profits are distributed to shareholders.
C) Businesses pay indirect taxes.
D) There is no depreciation.
D
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If the price level kept increasing, the short-run aggregate supply (SRAS) curve would get steeper because
A) all the unemployed would eventually be hired. B) the long-run aggregate supply curve is horizontal. C) there are limits to how long workers can work long hours and capital can go without proper maintenance. D) the rate at which capacity can be expanded increases indefinitely.
"If the price of wine increases, the quantity purchased will increase." Is this a positive or a normative economic statement? Explain your answer
In most derivations of the aggregate expenditures model, investment is assumed to be independent of real GDP. What would be the effect on the aggregate expenditures (AE) function if investment spending were positively related to income?
a. The intercept of the AE function would rise. b. The slope of the AE function would become flatter. c. Both the slope and the intercept of the AE function would increase. d. The slope of the AE function would become steeper. e. The intercept of the AE function would increase, and its slope would become flatter.
Suppose that real domestic output in an economy is 300 units, the quantity of inputs is 50, and the price of each input is $9. The level of productivity in this economy is:
A. 50. B. 5. C. 6. D. 9.