Equilibrium GDP
a. is not affected by nominal wage adjustments
b. represents the level of output at which public welfare is maximized
c. in the long run is equal to the average of the short-run GDP equilibria
d. is influenced by long-run adjustments in the labor market
e. falls if aggregate demand increases
D
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Refer to the figure above. The quota restricts trade by the same amount as a tariff of
A) $20. B) $30. C) $50. D) Cannot answer without more information.
If a negative externality exists, __________ in order for the socially optimal output to be reached.
A. supply needs to increase B. supply needs to decrease C. demand needs to increase D. b and c E. none of the above
When the economy is in a recession, it
a. needs firms and people to borrow but few take advantage of the banking systems'willingness to loan at low interest rates b. needs firms and people to borrow but few take advantage of the banking systems' willingness to loan because interest rates are typically high in recession c. does not need firms and people to borrow from the banking system because firms and people are already earning less revenue because of the recession d. needs people to save more so that banks will have greater deposits and could lend out more e. reflects the fact that banks are typically loaned out and cannot finance further investment, which is part of the recession's problem
When the aggregate supply curve shifts adversely, what happens to the relationship shown in the Phillips curve?
a. It is reinforced, and made more applicable for policy. b. It is destroyed, and no longer applies for policy. c. It is unchanged, although the curve becomes less steep. d. It is unchanged, although the curve shifts inward and to the left.