On a PPF with two products, health care and housing, what would occur in a stagnant economy if health care output increased?
A. Housing would increase.
B. Deflation would occur.
C. Housing would decrease.
D. The stagnation would end.
Answer: C
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What impact might a decrease in the U.S. federal budget deficit have on interest rates and exchange rates in the market for the U.S. dollar? (Assume the exchange rate is stated in terms of foreign currency per U.S. dollar.)
A) Interest rates and exchange rates decrease. B) Interest rates and exchange rates increase. C) Interest rates increase and exchange rates decrease. D) Interest rates decrease and exchange rates increase.
How are the fundamental economic questions answered in a market economy?
A) The government alone decides the answers. B) Individuals, firms, and the government interact in markets to decide the answers to these questions. C) Households and firms interact in markets to decide the answers to these questions. D) Large corporations alone decide the answers.
The long-run aggregate supply analysis assumes that:
A. Input prices are fixed while product prices are variable B. Input prices are variable while product prices are fixed C. Both input and product prices are variable D. Both input and product prices are fixed
If potential GDP increases,
A) aggregate supply increases. B) the money wage rate must have fallen. C) the quantity of aggregate supply decreases. D) the price level rises. E) aggregate supply does not change.