The equilibrium level of GDP is the level at which
A. aggregate demand exceeds output.
B. aggregate demand equals output.
C. aggregate demand is less than output.
D. inventories are being depleted to meet demand.
Answer: B
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The model of expectations in which the current level of inflation depends on past levels is referred to as:
A) realized real expectations. B) adaptive expectations. C) rational expectations. D) composite expectations.
A group of firms that has entered into a collusive agreement to restrict output and increase prices and profits is called
A) a compliance. B) a cartel. C) an oligopoly. D) a duopoly.
The expectation of future devaluation causes a balance of payments crisis marked by
A) a sharp rise in reserves and a fall in the home interest rate below the world interest rate. B) a sharp fall in reserves and an even bigger fall in the home interest rate below the world interest rate. C) a sharp fall in reserves and a rise in the home interest rate above the world interest rate. D) a sharp rise in reserves and an even greater rise in the home interest rate above the world interest. E) a sharp rise in reserves and a rise in the home interest rate to the level of the world interest.
Ceteris paribus, a 10 percent increase in income results in a 50 percent decline in the quantity of potatoes purchased. This implies potatoes can be categorized as _____
a. complements b. substitutes c. inferior goods d. normal goods e. luxury goods