The position of the long-run aggregate supply curve corresponds to the economy's:
a. full-employment real GDP
b. maximum possible level of employment.
c. natural level of personal consumption expenditure.
d. maximum possible level of personal consumption expenditures.
e. maximum possible price level.
a
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Rate of return regulation, as currently applied to many natural monopolies such as public utilities,
A) generally involves the use of price caps. B) gives the firms an incentive to inflate their costs. C) gives the firms an incentive to cut their costs as much as possible. D) generally keeps their prices higher than if they were unregulated monopolists.
How will contractionary monetary policy in Japan affect the demand for the yen and the supply of the yen in the foreign exchange market?
A) The demand for the yen will fall, and the supply of the yen will fall. B) The demand for the yen will increase, and the supply of the yen will increase. C) The demand for the yen will increase, and the supply of the yen will fall. D) The demand for the yen will fall, and the supply of the yen will increase.
A firm will tend to select the least costly input combination to produce its output.
Answer the following statement true (T) or false (F)