When the overall price level decreases, what is the effect on the economy?
a. There is an increase in the quantity of real GDP that producers are willing and able to supply.
b. Producers are willing and able to supply less real output.
c. Movement occurs along the short-run aggregate supply curve from point A to point B.
d. The short-run aggregate supply curve shifts leftward.
b. Producers are willing and able to supply less real output.
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Suppose the Fed increases the money supply. As a result of this, people go out and spend more money on consumer goods, increasing aggregate spending. This is known as a(n)
A) indirect effect of monetary policy. B) direct effect of monetary policy. C) indirect effect of fiscal policy. D) direct effect of fiscal policy.
Which of the following is a true statement about real and nominal GDP?
A) Nominal GDP is a better measure than real GDP in comparing changes in the production of goods and service year after year. B) If real GDP increases from one year to the next, we know that production of goods and services has risen. C) Increases in average prices do not affect the calculation of nominal GDP. D) If nominal GDP increases from one year to the next, we know that production of goods and services has risen.
Refer to Figure 9.4. If the government establishes a price floor of $40 and government purchases the surplus over quantity demanded, producer surplus will
A) fall by $275. B) fall by $500. C) remain the same. D) rise by $275. E) rise by $500.
Refer to Figure 6.1. At which point on the total product curve is the average product of labor the highest?
A) point A. B) point B. C) point C. D) point D. E) none of the above