Over a period of time both the price and the quantity sold of a certain product have increased. One possible explanation might be that:
a. Supply decreased over time, while demand remained the same
b. Demand increased over time, while supply remained the same
c. Supply increased over time, while demand remained the same
d. Supply increased over time, while demand declined
b. Demand increased over time, while supply remained the same
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The long-run adjustment to a negative supply shock results in
A) the price level rising. B) the short-run aggregate supply curve shifting to the right. C) workers being willing to accept higher wages. D) unemployment rising.
If the simple spending multiplier is 10, the marginal propensity to save (MPS) is:
a. 1/10. b. 9/10. c. 1/9 d. 10/9. e. 9.
For a small open economy, assume that the marginal propensity to import is 0.3, and that interest rates, exchange rates, and the price level are all constant. If an increase of $10 billion in government spending results in an increase of $6 billion in imports, then
A. real domestic investment decreases by $4 billion. B. real gross domestic product (GDP) increases by $4 billion. C. taxes increase by $10 billion. D. the spending multiplier is 2.
An individual or country that has a comparative advantage in the production of one good:
A. must have an absolute advantage in the good's production. B. must not have an absolute advantage in the good's production. C. may or may not have an absolute advantage in the good's production. D. must not have an absolute advantage in the production of the other good.