Real GDP will increase
a. only when prices increase.
b. only when output increases.
c. when prices increase or output increases.
d. All of the above are correct.
b
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Which of the following is a true statement about the multiplier?
a. The multiplier rises as the MPC rises. b. The smaller the MPC, the larger the multiplier. c. The multiplier is a value between zero and one. d. The multiplier effect does not occur when autonomous expenditure decreases.
A year-long drought that destroys most wheat crops for the season would shift the:
A. aggregate demand curve only. B. aggregate demand curve, and the short-run aggregate supply curve would shift in response. C. short-run aggregate supply curve only. D. short-run aggregate supply curve and the long-run aggregate supply curve.
The invisible hand enforces the tendency toward
a. MR = MU. b. MC = P = MU. c. MC = MPP = P. d. MRP = MPP = P.
There are two states of the world. The person receives $100 in state one which occurs with probability 0.6. If the person is rational and their expected return is $80, then in state two the person must receive
a. $20 b. $25 c. $50 d. $100