Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the short run would be:
A. P3 and Y1.
B. P2 and Y1.
C. P2 and Y3.
D. P1 and Y2.
Answer: B
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Monopolistically competitive firms increasing their advertising will definitely achieve which of the following?
A) shift their average total cost curve up B) shift their demand curve to the right C) increase their economic profit D) shift their demand curve to the right and shift their average total cost curve up
The costs to firms of changing prices are called
A) menu costs. B) redistribution costs. C) anticipation costs. D) money illusion costs.
Economists usually maintain that policy designed to increase aggregate demand cannot have any long-run real effects. What lies behind this argument?
What will be an ideal response?
Balancing new government purchases with an equivalent increase in taxes will avoid stimulus to the economy.
Answer the following statement true (T) or false (F)