Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD1 the result in the long run would be:
A. P4 and Y1.
B. P4 and Y2.
C. P5 and Y1.
D. P5 and Y2.
Answer: D
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Comment on the following: "The problem with models like the Edgeworth Box and the Robinson Crusoe economy is that it is silly to assume competitive behavior when there are so few individuals in the market."
What will be an ideal response?
The nominal interest rate: a. varies directly with the rate of expected inflation in an economy
b. is the interest rate expressed in dollars of constant purchasing power. c. equals the difference between the real interest rate and the inflation rate. d. is the basis for decisions taken by the lenders and the borrowers in an economy. e. is the percentage increase in the average price level from one year to the next.
If a firm in a perfectly competitive market faces a market price of $5, and it decides to produce 400 units, the firm's total revenue will be:
A. $2,000. B. $5. C. $405. D. $400.
Each of the following is a determinant of demand except
a. tastes. b. production technology. c. expectations. d. the prices of related goods.