The ratchet effect means that:
A. when aggregate demand increases, the price level remains constant.
B. when aggregate supply decreases, the price level increases.
C. when aggregate supply increases, the price level decreases.
D. when aggregate demand decreases, the price level remains constant.
Answer: D
You might also like to view...
What determines if a person is in the labor force?
What will be an ideal response?
A major criticism of static tax analysis is that it
A) uses only ad valorem taxes. B) does not use ad valorem taxes. C) ignores the incentive effects created by higher tax rates. D) assumes that the tax base will not increase.
If Jenny’s taxes are $10,000 when she earns $50,000 and $12,000 when she earns $60,000, then
A. Jenny faces a progressive tax. B. Jenny faces a regressive tax. C. Jenny faces a proportional tax. D. Jenny faces a rising marginal tax rate.
The physical output that is due to the addition of one more unit of a variable factor of production is
A) average total cost. B) marginal cost. C) average product. D) marginal product.