In the long-run version of the aggregate demand and aggregate supply model, a shift in the aggregate demand curve:
A. can change the inflation rate as well as the real growth rate.
B. can change the inflation rate, but not the real growth rate.
C. can change the real growth rate, but not the inflation rate.
D. can change neither the real growth rate nor the inflation rate.
Ans: B. can change the inflation rate, but not the real growth rate.
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When planned aggregate expenditure is larger than real GDP, actual inventories ________ planned inventories and real GDP ________
A) are more than; decreases B) are more than; increases C) are less than; increases D) are not related to; increases E) are less than; decreases
If the government eliminates a tax on a good with a perfectly elastic supply, who benefits most?
A) buyers B) sellers C) buyers if the demand is also perfectly elastic, otherwise sellers D) buyers if the demand is unit elastic, otherwise sellers E) Buyers and sellers benefit equally.