If global pollution causes climatic changes that permanently harm crop production worldwide, aggregate supply and demand analysis would lead us to expect:
a. an increase in the price level
b. a decrease in the price level.
c. rightward shifts of the aggregate demand and aggregate supply curves.
d. a leftward shift of the aggregate demand curve.
e. an increase in the potential level of real GDP.
a
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
In a small economy in 2016, aggregate expenditure was $800 million while GDP that year was $850 million. Which of the following can explain the difference between aggregate expenditure and GDP that year?
A) Aggregate expenditure is always less than GDP in developed countries. B) Firm investment in inventories was greater than anticipated in 2016. C) Aggregate expenditure is always less than GDP in developing countries. D) Firm investment in inventories was less than anticipated in 2016.
If the minimum wage is set above the market wage
A) unemployment will rise. B) the quantity of labor supplied will be below the quantity of labor demanded. C) highly-skilled workers will have a harder time finding jobs. D) All of the above are correct.
The economy is in short-run equilibrium
A) at any point on the IS curve. B) only at the natural level of GDP. C) at any point on the LM curve. D) only at a point that is on both the IS and LM curves.