An economy in which output has decreased and prices have decreased would suggest a:
A. decrease in short-run aggregate supply.
B. increase in aggregate demand.
C. increase in short-run aggregate supply.
D. decrease in aggregate demand.
Answer: D
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Using the chained-dollar method to calculate real GDP, real GDP is calculated by
A) valuing the current output at last year's real GDP prices. B) valuing the current output at current year prices. C) averaging the growth of output from one year to the next when the growth rates are calculated using this year's prices and using last year's prices. D) either A or C, depending which gives the larger value for real GDP. E) averaging the value of current output valued using base year prices and current output valued using current year prices.
Refer to Figure 26-7. Suppose the Fed lowers its target for the federal funds rate. Using the static AD-AS model in the figure above, this situation would be depicted as a movement from
A) C to D. B) A to B. C) C to B. D) E to A. E) B to A.
Suppose a consumer buy books and DVDs. The price of a book is $10, the price of a DVD is $20 and the consumer's income is $400. If books are measured on the vertical axis and DVDs are measured on the horizontal axis, then the budget line intersects the vertical axis at:
A. 40. B. 20. C. 10. D. 400.
If the demand for hair gel increases, the effect on the hair gel manufacturing job market will be to
A. Have no impact on equilibrium wages. B. Decrease the demand for labor and reduce equilibrium wages. C. Increase the demand for labor and increase equilibrium wages. D. Reduce the supply of labor and increase equilibrium wages.