According to the hypothesis of New Keynesian inflation dynamics, an increase in aggregate demand brings about
A) initial sluggish adjustment of the price level followed by higher inflation later on.
B) initial rapid adjustment of the price level followed by lower inflation later on.
C) initial sluggish adjustment of real GDP followed by more rapid real GDP growth later on.
D) sluggish growth in real GDP both initially and later on.
A
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The demand for a necessity whose cost is a small portion of one's total income is
A. perfectly inelastic. B. relatively inelastic. C. relatively elastic. D. unit-elastic.
Prospect theory was proposed by:
A. John Nash. B. Milton Friedman and George Stigler. C. Amos Tversky and Daniel Kahneman. D. Gary Becker.
The ability of price-taker firms to freely expand or contract their businesses and to enter or exit the market means that
a. prices will always be high enough to generate positive economic profit. b. resources that would be more valuable elsewhere will be trapped, unproductively, in a particular industry. c. resource owners cannot move their resources to other areas where they would be more highly valued. d. resources that would be more valuable elsewhere will not be trapped, unproductively, in a particular industry.
When per capita real GDP is increasing, real output is growing
What will be an ideal response?