According to Keynesian theory, if equilibrium real GDP is below the full-employment level, then an increase in aggregate demand will result in which of the following changes in equilibrium?
a. Real GDP will rise, but the price level will remain constant.
b. Real GDP and the price level will both rise.
c. Real GDP will remain unchanged but the price level will rise.
d. None of the above.
a
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Which of the following best applies to the distinction between the "long run" and the "short run"?
A) The short run is a period of approximately 1-6 months while the long run is any time frame which is longer. B) In the short run, only new firms may enter, while in the long-run firms may either enter or exit the market. C) The rationing function of price is a short-run phenomenon whereas the guiding function is a long-run phenomenon. D) All of the above statements are correct.
According to the principle of marginal productivity, if
a. the product price is less than MRP, the firm is using too little of the input. b. the price of an input rises, the quantity demanded of the input will increase. c. MRP is greater than product price, the firm should reduce the use of the input. d. price of the input equals MRP, the firm is maximizing profit.
Suppose the demand for X is given by Qxd = 100 - 2PX + 4PY + 10M + 2A, where PX represents the price of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X. Based on this information, we know that good X is a
A. complement for good Y and a normal good. B. substitute for good Y and an inferior good. C. complement for good Y and an inferior good. D. substitute for good Y and a normal good.
A tariff
A. legally specifies maximum import or export ceilings. B. increases allocative efficiency. C. is a special tax applied only to internationally traded goods. D. lowers the prices of imported goods.