The aggregate demand curve is the sum of all demand curves of all goods and services in the economy.
Answer the following statement true (T) or false (F)
False
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Suppose the market demand function for ice cream is Qd = 10 - 2P and the market supply function for ice cream is Qs = 4P - 2, both measured in millions of gallons of ice cream per year. Suppose the government imposes a $0.50 tax on each gallon of ice cream. The deadweight loss due to the tax is:
A. $944,444. B. $2.83 million. C. $1.67 million. D. $1.89 million.
Implicit costs are:
a. the opportunity costs of using resources owned by the entrepreneur in his/her own business. b. payments the business owner must make on borrowed funds. c. costs which vary as the level of output varies. d. those payments the business owner makes in cash. e. the payments the business owner makes for public relations, such as donations to charity.
The demand curve for labor is identical to the
a. total labor cost curve b. marginal resource curve c. total revenue curve d. marginal revenue product curve e. marginal revenue curve
An important advantage of a fixed-exchange-rate system is that it
A. promotes the growth of international trade and international financial transactions, by reducing the risk to market participants that exchange rates will change unexpectedly and substantially. B. prevents an exchange rate from becoming overvalued. C. protects the domestic economy from being hit by foreign shocks. D. prevents an exchange rate from becoming undervalued.