If an economy is currently operating at its full employment level of real GDP, an increase in aggregate demand will _____.
Fill in the blank(s) with the appropriate word(s).
raise the price level
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
Answer the following statements true (T) or false (F)
If the marginal propensity to save is 0.4, the multiplier is 2.5. Money will fail to serve as a medium of exchange if it ceases to be a store of value. Aggregate expenditure includes consumption spending, unplanned investment spending, government purchases, and net exports. When Jack's income increases by $1,000, he spends an additional $850 dollars. This implies that his marginal propensity to consume is 0.85. When the dollar becomes stronger compared to the Japanese Yen, then the Japanese imports from the U.S. will increase.
A constant-cost industry is one that can expand and contract without effecting per unit production costs
a. True b. False
Which statement is false?
A. The minimum point of the AVC curve is the shutdown point. B. The minimum point of the ATC curve is the breakeven point. C. The firm's short-run supply curve runs up the marginal cost curve from the shutdown point all the way up the curve. D. None of these statements are false.