Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the short run would be:
A. P1 and Y2.
B. P2 and Y3.
C. P3 and Y1.
D. P2 and Y2.
Answer: B
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Assume the economy is initially in equilibrium with real GDP equal to potential GDP
Other things equal, if the economy enters a recession and there are no automatic stabilizers, the IS curve would shift to the ________, and the shift would be equal to ________. A) right; decline in investment spending B) left; decline in investment spending C) right; decline in investment spending times the multiplier D) left; decline in investment spending times the multiplier
A perfectly competitive firm has a random demand with a 30 percent chance of being $15 and a 70 percent chance of being $20. What is the firm's expected marginal revenue?
A) $20.00 B) $15.00 C) $19.00 D) $18.50
Average variable cost is a(n) ______ of costs that ______.
a. short-run estimate; do not change when output rises b. long-run measure; decrease when output rises c. per-unit measure; change with the level of output d. accounting summary; do not affect long-run total cost
Which of the following best describes the "education premium"?
A. The added pay for getting a higher level of education B. The added cost of getting a higher level of education C. The added benefits for society as a whole from a person getting a higher level of education D. The increase in average wages, in inflation-adjusted dollars, over time