Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the long run would be:
A. P1 and Y2.
B. P2 and Y2.
C. P3 and Y1.
D. P2 and Y3.
Answer: D
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A. Spend more on consumer goods. B. Use older, tried and true technology. C. Have its consumers save less. D. Have its business firms invest more.
What does the vertical intercept of a production possibilities frontier represent?
What will be an ideal response?
For a firm facing a downward sloping demand curve, marginal revenue
A) is at a minimum at the midpoint of the demand curve. B) is greater at higher prices than at lower prices. C) increases each time prices are lowered. D) falls each time prices are raised.
With sticky nominal wages an unexpected decline in aggregate demand can be expected to cause.
What will be an ideal response?