If the output level is such that the aggregate expenditure line lies below the 45-degree line, which of the following is true?
a. Aggregate expenditure is greater than output, so inventories will increase and output will be raised.
b. Aggregate expenditure is greater than output, so inventories will decrease and output will be increased.
c. Aggregate expenditure is less than output, so inventories will decrease and output will be raised.
d. Aggregate expenditure is less than output, so inventories will increase and output will be lowered.
e. Aggregate expenditure is greater than output, so inventories will increase and output will be lowered.
D
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When mismatch unemployment characterizes an economy
A) monetary and fiscal policies to raise AD are the appropriate government action. B) only monetary policy will be effective. C) monetary and fiscal policies to raise AD are not the appropriate government action. D) only general (not specific) fiscal policy will be effective.
Economists usually assume that all consumers have the same tastes and preferences
a. True b. False
Monopolistic competition is characterized by i) efficient scale ii) markup pricing over marginal cost iii) deadweight loss iv) excess capacity
a. i) and ii) only b. ii) and iv) only c. i), ii), and iii) only d. ii), iii), and iv) only
When the supply of a good decreases, there will be a(n):
A. decrease in the quantity demanded. B. increase in the quantity demanded. C. decrease in buyers' reservation prices for the good. D. decrease in demand.