If aggregate demand and nominal GDP increase while the price level is constant, we would conclude that
A) the economy is already at full employment.
B) the aggregate supply curve is upward sloping.
C) the aggregate supply curve is horizontal.
D) the aggregate demand curve is vertical.
C
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Okun's Law states that
A) there is a relationship between the unemployment rate, real GDP, and potential GDP. B) supply creates its own demand. C) as the unemployment rate rises, the inflation rate falls. D) a higher inflation rate leads to a higher nominal interest rate. E) as the real wage rate falls, the quantity of labor demanded increases.
According to the neo-Keynesians, the Phillips curve is stable over time
Indicate whether the statement is true or false
Here is a consumption function: C = C0 + MPC(Yd). The C0 term is usually defined as
A) autonomous consumption. B) point-zero consumption. C) mandatory consumption. D) propensitory consumption. E) none of the above
Economist A says that the economy is self-regulating. This economist most likely believes that
A) the economy can get stuck in a recessionary gap. B) wages and prices are inflexible downward. C) wages and prices are flexible. D) government should enact expansionary fiscal policy when the economy is in a recessionary gap. E) none of the above