If the economy is operating at a point at which short-run aggregate supply is horizontal, then
A) real GDP cannot expand.
B) real GDP cannot contract.
C) increases in aggregate demand do not increase the price level.
D) then increases in aggregate demand do not increase real GDP.
C
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What is the main argument which explains why the data do not show a positive relation between the deficit producing tax cuts in the early eighties savings rates?
A) People will increase savings to "finance" debt repayment by future generations. B) People will increase consumption to "finance" debt repayment by future generations. C) Savings is determined by uncertain events, the timing of future illnesses and death. D) Savings is determined by certain events, the timing of future illnesses.
When fiscal policy makers wish to reduce aggregate demand, they could enact:
A. contractionary monetary policy. B. expansionary monetary policy. C. contractionary fiscal policy. D. expansionary fiscal policy.
The 45-degree income line is the same as the aggregate expenditure curve
Indicate whether the statement is true or false
Which of the following is not a barrier to entry?
a. Legal restrictions b. Patents c. Large sunk costs d. Survivor rights