If an unanticipated increase in aggregate demand results in an output beyond the economy's long-run capacity, long-run equilibrium will eventually be restored by
a. an increase in the economy's productive capacity (LRAS shifts to the right).
b. higher resource prices, an increase in SRAS, and a decrease in the general level of prices.
c. higher resource prices, a decrease in SRAS, and an increase in the general level of prices.
d. a decrease in the natural rate of unemployment.
C
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National saving is defined as the amount of
A) business saving. B) household saving. C) business saving and household saving. D) private saving and government saving.
Cost-push inflation can be shown on an aggregate supply aggregate demand diagram as
A) a rightward shift of the aggregate supply curve with no change in aggregate demand. B) a rightward shift in the aggregate demand curve with no change in aggregate supply. C) a leftward shift in the aggregate demand curve with no change in aggregate supply. D) a leftward shift in the aggregate supply curve with no change in aggregate demand.
A monopolistically competitive firm will increase its production if
a. marginal revenue is greater than average total cost. b. price is greater than average total cost. c. price is greater than marginal cost. d. marginal revenue is greater than marginal cost.
Pam graduates from law school and gets a position in a law firm. At the same time the price of hamburger falls while other food prices have stayed the same. She notices that she buys less hamburger than she did before. Is she violating the law of demand?
A. No, since other things are not held constant, such as her income. B. Yes, since she is buying less hamburger at a lower price. C. No, since the law of demand refers to relative price changes and the price of hamburger falling is an absolute price change. D. Yes, since she is buying less hamburger in a relatively short period of time and we wouldn't expect her tastes to have changed.