Exhibit 10-6 Aggregate supply curve
In Exhibit 10-6, the aggregate supply curve becomes vertical at GDP = $1,200 because:
A. there are no more workers available at any wage rate to increase real GDP.
B. the price level remains constant.
C. the only workers available would demand higher wage rates.
D. the economy is experiencing low employment and low production.
Answer: A
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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
The difference between personal income and disposable income is:
A) corporate taxes B) personal taxes C) savings D) none of the above
The accompanying figure shows Avery's weekly production possibilities curve for scarves. 
Avery's PPC would shift outward if she:
A. devotes more time to knitting each week. B. devotes less time to knitting each week. C. knits more red scarves and fewer blue scarves each week. D. knits fewer red scarves and more blue scarves each week.
Define the following terms and explain their significance to the study of macroeconomics. a. Fiscal policy b. Transfer payments c. Effect of income taxes on the multiplier d. Supply-side tax cuts
What will be an ideal response?