According to Baumol and Blinder, from the demand side, an increase in the price level causes aggregate expenditures to
A. fall, resulting in a lower level of equilibrium income.
B. fall, resulting in a higher level of equilibrium income.
C. rise, resulting in a higher level of equilibrium income.
D. rise, resulting in a lower level of equilibrium income.
Answer: A
You might also like to view...
Assuming that the total market size remains constant, a monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing in the long run because
A) some of its customers have switched to purchasing the products of new entrants in the market. B) as the firm raises its price in the long run, it will lose some customers to new entrants in the market. C) its costs of production rises. D) new entrants into the market are more likely to have cutting edge products.
An economics professor points to a student in the front row and announces that "sitting in class is the thing you value most during this time period." Is the professor correct? Why or why not?