Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD1 the result in the long run would be:
A. P4 and Y1.
B. P4 and Y2.
C. P5 and Y1.
D. P5 and Y2.
Answer: D
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Consumption spending will ________ when disposable income ________
A) increase; decreases B) decrease; increases C) change unpredictably; decreases D) increase; increases
Evren wants to go into the donut business. For $500 per month he can rent a bakery complete with all the equipment he needs to make a dozen different kinds of donuts (K = l, r = 500). He must pay unionized donut bakers a monthly salary of $400 each
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a. True b. False Indicate whether the statement is true or false