Increases in aggregate demand
A. lead to increases in real interest and unemployment rates if there is considerable excess capacity in the economy.
B. result only in inflation when the economy operates at its maximum productive capacity.
C. may be caused by ever-greater downward pressures on prices and wages if reserve requirements are raised.
D. may be caused by an increase in taxes.
E. increase both inflation and the unemployment rates.
B. result only in inflation when the economy operates at its maximum productive capacity.
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When the efficient quantity of output is produced
A) the marginal social benefit of the last unit produced is equal to the marginal social cost of the last unit produced. B) the sum of consumer surplus and producer surplus is maximized. C) resources are used in the activities in which they are most highly valued. D) All of the above answers are correct.
If a firm takes the wage as given, then the firm's marginal expenditure on labor curve is
A) above the labor supply curve. B) below the labor supply curve. C) the same as the labor supply curve. D) upward sloping.
Assuming that firms maximize profits, how will the price and output policy of an unregulated monopolist compare with ideal market efficiency?
a. The output of the monopolist will be too large and the price too high. b. The output of the monopolist will be too small and the price too low. c. The output of the monopolist will be too small and the price too high. d. The price will be too high, but the impact of monopoly on the output is indeterminate.
A celebrity endorsement for a product that provides no information for the good is useless to consumers.
Indicate whether the statement is true or false.