The aggregate supply curve
A. is the sum of all supply curves of natural resources.
B. shows what each producer is willing and able to produce at each income level.
C. shows a negative relationship between the price level and real Gross Domestic Product (GDP).
D. relates planned aggregate production to price level.
Answer: D
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For a normal good, the income and substitution effect work in the same direction. For an inferior good, the income and substitution effects work in opposite directions
Does this imply that the demand curve for an inferior good is upward sloping? Explain.
Income elasticity relates to
A) a movement down a demand curve. B) a movement up a demand curve. C) a horizontal shift in a demand curve. D) the percentage change in quantity demanded divided by the percentage change in the price.
The demand for a product is relatively more elastic:
a. ?When it has few substitutes ?b. In the long-run c. ?When the money spent on the product represents a small portion of a typical buyer's budget d. ?When the product is broadly defined
The approach to understanding the determination of real GDP and the price level that emphasizes flexible wages and prices and competitive markets is
A. the Keynesian model. B. Adam Smith's Law. C. Murphy's Law. D. the classical model.