When the economy produces less than its potential output, it is:
A. producing a quantity less than the long-run aggregate supply quantity.
B. called a recession.
C. not in long-run equilibrium.
D. All of these are true.
Answer: D
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The "law of demand" refers to the fact that, other things remaining the same, when the price of a good rises,
A) the demand curve shifts rightward. B) the demand curve shifts leftward. C) there is a movement down along the demand curve to a larger quantity demanded. D) there is a movement up along the demand curve to a smaller quantity demanded. E) the demand curve shifts rightward and there is a movement up along the demand curve to a smaller quantity demanded.
Which of the following statements is TRUE about scarcity?
A) Both rich and poor people face the problem of scarcity. B) Scarcity exists only when supply is insufficient to meet demand. C) Scarcity exists only when a shortage exists. D) Scarcity can be eliminated when a country becomes richer.
Vertical integration often aims to
a. Prevent the retailers from defeating upstream price discrimination through arbitrage b. Avoid paying higher taxes c. Serve as a "signal" of the manufacturer's belief of the likely success of his product d. All of the above
If consumption spending increases from $758 to $767 billion when disposable income increases from $912 to $927 billion, it can be concluded that the marginal propensity to consume is:
a. 0.4 b. 0.5 c. 0.7 d. 0.6