We draw the long-run aggregate supply curve as a vertical line to reflect the fact that
A) changes in the price level do not alter the level of long-run real GDP after full adjustment has occurred.
B) an accurate depiction of the production possibilities curve is vertical after full adjustment has occurred.
C) technology and resource endowments do not affect long-run real GDP after full adjustment has occurred.
D) the productive capacity of the economy never changes after full adjustment has occurred.
A) changes in the price level do not alter the level of long-run real GDP after full adjustment has occurred.
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If Libby can produce 20 gallons of beer or 5 gallons of wine per hour, her opportunity cost of one gallon of beer is 4 gallons of wine
Indicate whether the statement is true or false
If no fiscal policy changes are made, suppose the current aggregate demand curve will increase horizontally by $1,000 billion and cause inflation. If the marginal propensity to consume is 0.75, federal policymakers could follow Keynesian economics and restrain inflation by decreasing:
a. government spending by $250 billion. b. taxes by $100 billion. c. taxes by $1,000 billion. d. government spending by $1,000 billion.
A decrease in the required reserve ratio will:
a. reduce commercial bank loans and reduce the money supply. b. increase commercial bank loans and reduce the money supply. c. increase commercial bank loans and increase the money supply. d. decrease commercial bank loans and increase the money supply.
Which of the following would be most likely to improve the standard of living of the residents of a less-developed country?
A. the development of strong labor unions B. a sharp increase in the legal minimum wage C. an increase in expenditures on education and capital investment D. rapid growth rate of the money supply