Refer to Figure 8.3. Holding other variables constant, if the economy is originally in equilibrium at the intersection of D1 and S1 and firms experience an increase in technology of production, the economy would move to the new equilibrium point
represented by A) w1 and L2.
B) w3 and L2.
C) w2 and L2.
D) w2 and L3.
B
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Refer to the scenario above. After the implementation of the tax, Thomas's expenditure on wine will:
A) remain the same. B) increase by $50. C) decrease by $50. D) increase by $100.
Answer the following statements true (T) or false (F)
1. When there is an increase in aggregate demand in the short run, there will be an increase in the price level but not in the level of output or employment. 2. When the economy is experiencing demand-pull inflation, its real GDP tends to be rising. 3. The oil crises of the 1970s and 1980s can best be illustrated as a shift of the aggregate demand curve to the left. 4. Cost-push inflation can be described as a rightward shift of the aggregate supply curve. 5. Minimum wage laws tend to make the price level more flexible rather than less flexible.