What does the classical model predict will happen when an increase in aggregate demand causes the overall price level to rise?
a. Sticky upward prices will allow producers to quickly boost their output.
b. Input suppliers will compete against each to quickly drive down input prices.
c. A prolonged inflationary gap will occur at the higher price level.
d. Input suppliers will bid up input prices to quickly adjust to the higher price level.
d. Input suppliers will bid up input prices to quickly adjust to the higher price level.
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Use the following graphs to answer the next question.
"The bigger the volume, the lower the cost, and we pass the savings on to you" is a familiar slogan. Its idea is illustrated in which of the above graphs?
A. Graph 1 B. Graph 2 C. Graph 3 D. Graph 4
Tony's Taco Truck has an average variable cost of $1.50 and a marginal cost of $2 when it produces 50 units of output (tacos). We can conclude that the average variable cost of producing 51 tacos is a. higher than $1.50
b. lower than $1.50. c. equal to $1.50 d. either higher or lower than $1.50 depending on the direction of the marginal cost curve.
Both approaches—Keynesian and monetarist—are ways of analyzing
A. aggregate supply. B. aggregate demand. C. the average price level. D. government spending and expenditures.
How can a proprietorship or partnership raise funds for expansion?
A) borrow from someone or an institution willing to lend the funds B) reinvest profit back into the business C) take on a partner or more partners D) Any of these would generate funds for expansion.