Analyze the following statement: "I know the fact that prices have started to rise rapidly seems like bad news, but at least prices starting to go up means that output must be starting to go up as well."
What will be an ideal response?
If the increase in the price level is due to a rightward shift of the AD curve, then the statement is correct. But the price level might also start to rise as a result of a leftward shift of the SRAS curve, which will result in declining output.
You might also like to view...
Ongoing economic growth in real GDP per person requires all of the following EXCEPT ________
A) investment in human capital B) the discovery of new technologies C) saving and investment in new capital D) population growth
The above figure gives your budget line between CDs and magazines. Which combination of CDs and magazines is not affordable?
A) combination a B) combination b C) combination c D) both combinations b and d
In what decade did the Great Depression occur?
a. 1920s b. 1930s c. 1940s d. 1950s
If the price of inputs rises and personal income taxes rise:
a. Price index falls, and real GDP rises. b. Price index falls, and real GDP falls. c. Price index falls, and the change in real GDP is uncertain. d. The change in price index is uncertain, and real GDP rises. e. The change in price index is uncertain, and real GDP falls.