A reduction in world oil supplies is likely to cause
A. an increase in equilibrium price level and an increase in real Gross Domestic Product (GDP).
B. a reduction in aggregate supply, a rise in the equilibrium price level, and a fall in real Gross Domestic Product (GDP).
C. an increase in aggregate demand and a decrease in the equilibrium price level.
D. a decrease in equilibrium price level and an increase in real Gross Domestic Product (GDP).
Answer: B
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The economy moves up a stationary aggregate demand curve when the Fed:
A. decreases real interest rates in response to inflation, but does not change its target inflation rate or the Fed's policy reaction function. B. increases its target inflation rate, reflected by a downward shift in the Fed's policy reaction function. C. decreases its target inflation rate, reflected by an upward shift in the Fed's policy reaction function. D. increases real interest rates in response to inflation, but does not change its target inflation rate or the Fed's policy reaction function.
All of the following cost curves are U-shaped except
A) the marginal cost curve. B) the average fixed cost curve. C) the average total cost curve. D) the average variable cost curve.
You have noticed that there is a persistent shortage of teachers in an inner-city school district in your state. Based on this observation, you suspect that:
A. the wage for teachers in that district is lower than the equilibrium wage. B. the demand for teachers in the inner-city school district is too low. C. there is an excess supply of teachers in other districts. D. the wage for teachers in that district is higher than the wage in other districts.
Initially, demand-pull inflation will
A) increase both the price level and increase real GDP. B) shift the aggregate supply curve rightward. C) decrease potential GDP. D) increase the price level and decrease real GDP. E) increase the price level and not change real GDP.