If both the price level and nominal incomes change by the same percentage:
a. real GDP will remain constant
b. the aggregate supply curve will be upward-sloping.
c. profit margins will change in real terms.
d. the long-run aggregate supply curve will be horizontal.
e. both a and d.
a
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Consumers most likely decide on their current consumption spending by looking at their short-run income prospects.
Answer the following statement true (T) or false (F)
Suppose the federal funds rate rises by 0.5 percent. If the Taylor rule is correct, this might be because output is:
A. 0.5 percentage points below potential output. B. 0.5 percentage points above potential output. C. 1 percentage point below potential output. D. 1 percentage point above potential output.
When ________, the price level falls, inventories increase and firms respond by reducing output and employment.
A. aggregate demand decreases B. aggregate supply decreases C. aggregate supply increases D. aggregate demand increases
If it is impossible or very costly to prevent someone from benefiting from a good even if the person does not pay for it, the good is
A) nonrival. B) nonexcludable. C) pure. D) rival.