Along the intermediate range of the aggregate supply curve, an increase in the aggregate demand curve will increase:
A. both the price level and real GDP.
B. only real GDP.
C. only the price level.
D. real GDP and reduce the price level.
Answer: A
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Suppose an MNC subsidiary buys 100 input units from its parent at a price of $2 each. It has $300 in additional production costs, and sells its 100 units of output for $6 to the MNC. It pays a 25% local profit tax
The MNC sells the output at home for $8, and its cost of producing inputs is $1 . It pays a profit tax of 20% at home on repatriated profits. What is the subsidiary net profit? Assume no selling costs at home. What is the MNC's total profit from the operation?
The income effect refers to the impact of a change in
a. income on the price of a good b. the general price level caused by a change in the price of another good c. the price of a good on real income d. the price of a substitute for the good under consideration e. demand when income changes
Which of the following would shift the short-run Phillips curve?
a. an negative supply shock b. an increase in inflationary expectations c. a decrease in inflationary expectations d. All of the above.
Monopolistic competitors advertise because
A) they have downward sloping demand curves. B) the demand curves they face are very elastic. C) they produce goods that can be differentiated from the goods of other firms in the industry. D) they can earn long-run profits if they advertise.