The new Keynesian sticky-price theory indicates that an increase in aggregate demand generates
A. rapid increases in both real Gross Domestic Product (GDP) and the price level.
B. sluggish increases in both real Gross Domestic Product (GDP) and the price level.
C. a speedy rise in the price level but a sluggish increase in real Gross Domestic Product (GDP).
D. a speedy rise in real Gross Domestic Product (GDP) but a sluggish increase in the price level.
Answer: D
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A determinant of the price elasticity of supply that is also a determinant of the price elasticity of demand is:
A. availability of inputs. B. flexibility of the production process. C. adjustment time. D. whether the good is a luxury or a necessity.
Which of the following might increase the supply curve of labor?
a. Increasing licensing requirements. b. Increasing discrimination against females. c. Increasing discrimination against blacks. d. All of the above. e. None of the above.
Suppose the people of Rhodia spend $70 and save $30 for every $100 they earn. In this case, the marginal propensity to consume equals _____
a. 0.3 b. 0.7 c. 0.5 d. 0.8
The general rule for hiring any input (say, labor) in the profit-maximizing amount is MRC = MRP. This rule takes the special form W = MRP (where W is the wage rate) when the:
A. labor supply curve is upsloping. B. supply of labor is inelastic. C. firm is hiring labor under purely competitive conditions. D. firm is hiring labor under imperfectly competitive conditions.