The main reason why the economy’s aggregate supply curve slopes upward is that
A. as the price level rises, businesses incur additional costs.
B. businesses typically purchase labor and other inputs under long-term contracts that fix the cost of the input in money terms.
C. as the price level rises, workers have higher real wages to spend for additional consumer goods.
D. All of these responses are correct.
Answer: B
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Decreases in autonomous spending have a contractionary effect and make ________ levels of real income consistent with a given interest rate
A) lower B) higher C) constant D) none of the above.
For a perfectly competitive firm, in the short run, which of the following statements is true?
a. A price above minimum average variable cost, but below average total cost will produce an economic profit. b. A price below minimum average variable cost will cause the firm to shut down. c. Marginal cost is parallel to the axis showing quantity of output. d. Price is always greater than marginal revenue. e. Every firm contributes a significant amount to the total market output.
Which of the following groups believe that lower tax rates will increase the incentives to work, invest, and produce?
A. Monetarists. B. Supply-siders. C. New classical economists. D. Keynesians.
Generally speaking, the government implements fiscal policy in a
A. fast but inaccurate manner. B. fast and accurate manner. C. slow but accurate manner. D. slow and inaccurate manner.