If both the price level and nominal incomes change by the same percentage:
A. real GDP will remain constant.
B. the aggregate supply curve will be upward-sloping.
C. profit margins will change in real terms.
D. the long-run aggregate supply curve will be horizontal.
Answer: A
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Refer to the scenario above. If Molly wins the auction by using her optimal bidding strategy, she will earn a surplus of ________
A) $0 B) $50 C) $14 D) $25
Expansionary monetary policy results in a shift of the aggregate demand curve to the right. The effect of the monetary policy on the aggregate demand is:
A. direct from the money supply to the aggregate demand. B. indirect through the short-term and long-term interest rates. C. indirect through the government expenditures. D. direct from the money supply to the aggregate supply.
The structural deficit can be defined as
A. the deficit that is structurally obstructing economic recovery to reach level of high employment. B. a hypothetical construct that estimates the deficit, given current tax rates and expenditure policies, if the economy were operating at some fixed high-employment level. C. the deficit necessary to restructure the economy and reach a desired high-employment level. D. the deficit that would prevail if fiscal policy were structured differently in order to reach a desired high-employment level.
Static tax analysis assumes
A. changes in the tax rates will change the tax base. B. changes in the tax rates have no effect on the tax base. C. changes in the tax rates have no effect on tax revenue. D. all of the present tax rates will be in place for a minimum of twenty years.