Aggregate demand and aggregate supply analysis suggest that, in the short run, an expansionary monetary will result in
a) a shift in the aggregate demand curve to the left
b) a shift in the aggregate supply curve to the left
c) an increase in real GDP without much inflation when the economy is on the horizontal portion of the aggregate supply curve
d) an increase in real GDP with high inflation when the economy is on the horizontal portion of the aggregate supply curve
e) an increase in real GDP and no inflation when the economy is on the verticall portion of the aggregate supply curve
Ans: c) an increase in real GDP without much inflation when the economy is on the horizontal portion of the aggregate supply curve
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The price elasticity of demand for Rosie's Roses fresh flowers the week of Valentine's Day is 1.40 and is 2.25 other days of the year. If Rosie's Roses faces a constant marginal cost of $2 per rose, what is the profit-maximizing peak-load price to charge the week of Valentine's Day?
A) $7.00 B) $9.50 C) $3.60 D) $5.60
How is economic growth shown by the production possibilities curve?
A) by shifting the curve to the right B) by moving the curve to the left C) by moving up the existing curve D) by changing the shape of the curve from a straight line to one that is bowed
Economists believe that oligopolists like American Airlines and the Kellogg Company:
a. make price and output decisions without regard to what their competitors might do b. have no perceptible influence on the market price, but choose output where marginal revenue equals the marginal cost of production. c. carefully watch and anticipate the moves of their competitors. d. have no control over market but produce output to the point where demand equal marginal cost.
Which of the following best explains why high marginal tax rates retard output?
a. High marginal tax rates reduce the incentive to earn, invest, and use resources efficiently. b. High marginal tax rates will encourage foreign investment. c. High marginal tax rates will reduce budget deficits and lower interest rates. d. High marginal tax rates encourage people to substitute more-desired nondeductible goods for less-desired tax-deductible goods.