As a percentage of GDP, the largest deficits in the twentieth century
A. were caused by huge tax cuts in the 1980s.
B. resulted from spending increases in the 1990s.
C. resulted from World War II.
D. resulted from the Vietnam War.
Answer: C
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The level of aggregate supply in the long run is not affected by
A) changes in technology. B) changes in the price level. C) changes in the capital stock. D) changes in the number of workers.
If the price elasticity of demand is elastic, then:
A. Ed < 1. B. consumers are relatively not very responsive to a price increase. C. an increase in the price will increase total revenue. D. there are likely a large number of substitute products available.
If aggregate demand shifts from AD2 to AD4,
A. both output and the price level will rise.
B. output will rise and the price level will fall.
C. output will rise and the price level will remain the same.
D. both output and the price level will fall.
Suppose a firm employs only capital and labor as inputs. Explain how the firm should allocate its inputs in order to maximize profits in a perfectly competitive market
What will be an ideal response?