According to the classical theory, an inward shift in aggregate demand would reduce
A) real Gross Domestic Product (GDP) and the price level.
B) the price level but have no effect on real Gross Domestic Product (GDP).
C) real income but have no impact on the price Gross Domestic Product (GDP).
D) the price level but increase real Gross Domestic Product (GDP).
B
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A firm is generally more interested in marginal profits than in total profits.
Answer the following statement true (T) or false (F)
The time inconsistency of policy implies that
a. what policymakers say they will do is generally what they will do, but people don't believe them because of current policy. b. when people expect that inflation will be low, it is easier for the Fed to increase output by increasing the money supply. c. people will believe Fed policy will be less inflationary than the Fed claims. d. what policymakers say they will do is usually not what they do, but people believe them anyway.
Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Cars SoldTrucks SoldLarry105Joe99Ralph312 Based on last month's data, Ralph's opportunity cost of selling a truck is selling:
A. 3 cars. B. 1/4 of a car. C. 4 cars. D. 1/3 of a car.
Aggregate surplus:
A. is the sum of total willingness to pay and total avoidable costs of production. B. is minimized under perfect competition. C. is the sum of consumer and producer surpluses. D. is equal to zero in the long run.