In a persisting demand-pull inflation
A) aggregate demand increases and potential GDP decreases.
B) aggregate demand decreases and aggregate supply decreases.
C) aggregate supply decreases and aggregate demand increases.
D) aggregate supply increases and aggregate demand increases.
E) None of the above answers is correct.
C
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The major factor distinguishing M1 from M2 is:
a. Legal tender status. b. Liquidity. c. Whether or not the financial asset is backed by gold, silver, or some other precious metal. d. Whether or not the financial asset can be turned into a precious metal quickly and without substantial loss of value. e. All of the above are important distinguishing factors.
When wage rates rise the short-run aggregate supply curve shifts to the right
Indicate whether the statement is true or false
If the government were to decrease its spending, it would expect aggregate demand to:
A. rise, and thus GDP to fall. B. rise, and thus GDP to rise. C. fall, and thus GDP to rise. D. fall, and thus GDP to fall.
The Lerner index in the paper industry is 0.58. Based on this information, a firm charging $3.25 per ream of paper should have a marginal cost of:
A. $1.885. B. $1.365. C. $0. D. $3.25.