When the aggregate supply curve is vertical, which of the following is not true?
A. Any increase in the price level will not cause an increase in aggregate output.
B. The economy is expanding quickly.
C. The economy is at capacity.
D. The economy is producing the maximum sustainable level of output.
Answer: B
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. A subsidy:
A. All of these statements are true. B. is a requirement that the government pay an extra amount to producers or consumers of a good. C. is used by governments to encourage the production and consumption of a particular good or service. D. is used by governments as an alternative to price controls to benefit certain groups without generating a shortage or a surplus.
If the supply of bananas increases, but the demand remains the same, which of the following would happen?
a. Price becomes indeterminate.
b. Quantity becomes indeterminate.
c. Price falls.
d. Quantity falls.
For the United States, suppose the value of exported goods is greater than the value of imported goods. This implies that
A) the domestic currency will depreciate. B) the dollar price of foreign currency will increase. C) the country is running a deficit in its balance of trade. D) the country is running a surplus in its balance of trade.
The normal rate of return on capital is also known as the
A) fixed cost of capital. B) depreciation cost of capital. C) opportunity cost of capital. D) monopoly rent.