What is the cumulative effect of a simultaneous increase in area income of 5 percent and a 10 percent increase in prices at Urban General?
a. Quantity demanded at Urban General falls by 4 percent.
b. Quantity demanded at Urban General rises by 4 percent.
c. Quantity demanded at Urban General rises by 1 percent.
d. Quantity demanded at Urban General falls by 1 percent.
e. Quantity demanded at Urban General does not change.
C
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Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting downward C. Aggregate demand shifting rightward D. Aggregate demand shifting leftward
A goal of expansionary monetary policy is to:
A) decrease the rate of growth of real GDP. B) increase the rate of growth of real GDP. C) increase inflation. D) none of the above.
The classical economists argued that the production of goods and services (supply) generates an equal amount of total income and, in turn, total spending. This theory is called:
a. Keynes' General Theory. b. Say's Law. c. the "animal spirits" theory. d. the law of autonomous consumption.
The marginal labor cost curve for a monopsonist
a. is equal to the supply curve of labor b. lies above the supply curve of labor c. lies below the supply curve of labor d. is affected by the fact that workers are less willing to work than under conditions of perfect competition e. is lower than the marginal revenue product of labor in equilibrium which assures the monopsonist a return to monopoly power