If a positive permanent supply shock were to occur, the resulting equilibrium would be a:
A. higher level of output at lower prices.
B. lower level of output and prices.
C. higher level of output and prices.
D. lower level of output at higher prices.
Answer: A
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The long-run aggregate supply increases as:
a. new production technology is introduced. b. the quality of labor declines. c. the average price level increases. d. natural resources become depleted. e. the minimum wage rate increases.
Exhibit 8-1 Disposable income and consumption data Disposable Income(Y) Consumption(C) 0 500 1,000 1,400 2,000 2,200 3,000 2,900 4,000 3,500 5,000 4,000 In Exhibit 8-1, when disposable income is increased from $2,000 to $3,000 to $4,000, the marginal propensity to consume
A. remains constant. B. increases from 0.6 to 0.7. C. decreases from 0.8 to 0.7. D. decreases from 0.7 to 0.6.