Refer to the graph below. If the economy is initially at equilibrium at the intersection of AD1 and AS1 and there is a tax cut, then, from a skeptical mainstream perspective, the immediate impact is that aggregate:
A. Demand would increase to AD2 and aggregate supply would increase to AS2
B. Demand would increase to AD2 and aggregate supply would remain at AS1
C. Supply would increase to AS2 and aggregate demand would remain at AD1
D. Demand would remain at AD1 and aggregate supply would remain at AS1
B. Demand would increase to AD2 and aggregate supply would remain at AS1
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Refer to Figure 4-5. The figure above represents the market for pecans. Assume that this is a competitive market. Which of the following is true?
A) If the price of pecans is $3 producers will sell 12,000 pounds of pecans but this output will be economically inefficient. B) If the price of pecans is $9 consumers will purchase more than the economically efficient output. C) Both 4,000 pounds and 12,000 pounds are economically inefficient rates of output. D) If the price of pecans is $3 the output will be economically efficient but there will be a deadweight loss.
If Slick Shades has a constant marginal cost of production equal to $80 and the distributors have a constant marginal cost of distribution equal to $30, what is the profit-maximizing number of sunglasses (in hundreds) for Slick Shades to produce?
The figure above shows the wholesale demand and marginal revenue curves for Slick Shades Sunglasses, a sunglasses firm with market power. Slick Shades Sunglasses has a constant marginal cost of production and it sells to perfectly competitive independent retail distributors that have a constant marginal cost of distribution.
A) 40
B) 80
C) 55
D) 60
Why does an economist create a market demand curve?
(A) To show how various conditions can change the demand for a good. (B) To learn what demands the market will make under unusual conditions. (C) To have an idea of how a market would change if conditions in an area changed. (D) To predict how people will change their buying habits when prices change.
An increase in the price level causes government spending to:
A. increase in social welfare spending only. B. decrease. C. remain unaffected. D. increase.