Refer to the graph below. Assume that the economy is initially at full-employment equilibrium at point A. If AD increases, then the long run equilibrium point will be at point:
A. A
B. B
C. C
D. D
C. C
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Which of the following is associated with an increase in potential output?
A. An increase in the target inflation rate B. A decrease in the target rate of capacity utilization C. An increase in the target rate of unemployment D. A decrease in the target rate of unemployment
When technology increases the supply of a good and lower prices increase the quantity demanded,
A) the economy is reallocating resources to achieve an efficient allocation. B) consumer surplus falls. C) the invisible hand is unnecessary. D) the marginal benefit of the good increases with the quantity produced. E) the economy is no longer efficient because the quantity changes.
In China, suppose that the price level was 100 in 2014, 110 in 2015, and 120 in 2016. Over these three years
A) the inflation rate accelerated. B) inflation did not occur. C) prices were stable. D) the inflation rate was positive.
A country in which a significant fraction of domestic production takes place in foreign-owned factories and facilities is most likely a country where
A) GNP is much larger than GDP. B) GDP is much larger than GNP. C) GDP is equal to GNP. D) GDP is not comparable to GDP.