If aggregate supply is totally price inelastic, an increase in aggregate demand will:
a) Increase price but not output
b) Increase output but not price
c) Increase output and price
d) Decrease output and price
Answer: a) Increase price but not output
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Positive analysis is concerned with "what ought to be," while normative analysis is concerned with "what is."
Indicate whether the statement is true or false
First Safety, a commercial bank, has $6,000,000 of outstanding demand deposits and actual reserves of $1,700,000 . If the reserve ratio is 25 percent, what is the maximum amount of new loans the bank can extend?
a. $100,000 b. $425,000 c. $200,000 d. $1,500,000
In a given community, if the government builds more freeways, then the supply curve for freeway space shifts rightward and the demand curve for freeway space shifts leftward
Indicate whether the statement is true or false
Economists assume that rational people do all of the following except
A) use all available information as they act to achieve their goals. B) undertake activities that benefit others and hurt themselves. C) weigh the benefits and costs of all possible alternative actions. D) respond to economic incentives.