Let's be careful about defining our terms properly. Aggregate supply is the total value of
a. goods produced in the manufacturing sector that they are willing and able to supply at varying price levels
b. goods and services that firms in the economy are willing and able to supply at varying price levels
c. services that suppliers are willing and able to supply at varying price levels
d. goods and services less the amount exported that firms are willing and able to supply at varying price levels
e. goods and services including imports that firms are willing and able to supply at varying price levels
B
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When the Artistic Headwear Company in Bangor, Maine, protecting itself from inadequate supplies, decides to increase its raw material inventories, this decision is included in
a. saving b. dissaving c. transitory investment d. inventory investment e. autonomous investment
The new classical model implies that a
a. budget surplus will effectively retard inflation emanating from excess demand. b. budget deficit will increase the real interest rate. c. substitution of debt for tax financing will leave aggregate demand and real output unchanged. d. planned budget deficit will be a highly effective tool to combat a recession.
Which of the following is correct? When the price of normal good Z falls:
A) both income and substitution effects cause the consumer to buy more. B) both income and substitution effects cause the consumer to buy less. C) the income effect causes the consumer to buy less, but the substitution effect causes her to buy more. D) the income effect causes the consumer to buy more, but the substitution effect causes her to buy less.
A purely self-interested diner is more likely to tip:
A. whenever he can afford to. B. always, to assure good service. C. only when dining in a restaurant at which he often eats. D. only when dining in a very up-scale restaurant.