Holding the level of prices fixed implies that a given increase in aggregate demand
A) will have a smaller effect on real GDP than would be the case if prices were more flexible.
B) will have a larger effect on real GDP than would be the case if prices were more flexible.
C) has the same effect on real GDP as when prices are more flexible.
D) has a smaller effect on nominal GDP than when prices are more flexible.
B
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If technological advances lower the cost of computer chips, in the market for computers the equilibrium price will ________ and the equilibrium quantity will ________
A) fall; increase B) fall; decrease C) rise; increase D) rise; decrease
Wealth is far more evenly distributed than income
Indicate whether the statement is true or false
If profit-seeking major oil companies began to use current profits from the oil business to buy department stores and hotel chains, economic analysis suggests that
a. oil company profits were high relative to other possible investment opportunities. b. oil company executives thought profits from investment outside the oil industry would be lower than oil-industry investments. c. oil company executives must believe these other investments will be more profitable than investments in the oil industry. d. the government would be justified in subsidizing oil companies on grounds of economic efficiency.
Figure 33-2
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Given the situation in graph (1) in Figure 33-2, what movement would be expected in graph (2) from the economy’s self-correcting mechanism?
A. A to B B. A to D C. C to E D. D to C