In general economic environments that correspond to higher levels of planned aggregate expenditure for a given level of Y have PAE curves that are:
A. higher on the expenditure diagram.
B. lower on the expenditure diagram.
C. at multiple points on the diagram.
D. equivalent at point in the diagram.
A. higher on the expenditure diagram.
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Robinson Crusoe divides his time between catching fish and gathering fruit. Part of his production possibilities frontier is given in the above table
If Mr. Crusoe is on his PPF and he increases the amount of fruit he gathers from 56 to 90 pounds, the opportunity cost is A) 37 pounds of fish. B) 31 pounds of fish. C) 17 pounds of fish. D) 34 pounds of fruit. E) 90 pounds of fruit.
The primary reason why monopolistically competitive firms cannot earn an economic profit in the long run is because
A) there are barriers to entry. B) there is freedom of entry. C) the antitrust laws prevent profit from increasing. D) recessions occur. E) they collude to earn a normal profit.
Which of the following best completes the sentence; "Under a gold standard a central bank … "?
A. will have gold reserves depleted when exports exceed imports. B. wants to keep their gold reserves fixed. C. can have too little gold but never have too much. D. can have too much gold.
Answer the following statements true (T) or false (F)
1. When there is an increase in aggregate demand in the short run, there will be an increase in the price level but not in the level of output or employment. 2. When the economy is experiencing demand-pull inflation, its real GDP tends to be rising. 3. The oil crises of the 1970s and 1980s can best be illustrated as a shift of the aggregate demand curve to the left. 4. Cost-push inflation can be described as a rightward shift of the aggregate supply curve. 5. Minimum wage laws tend to make the price level more flexible rather than less flexible.