Using the aggregate expenditure-output model, assume the aggregate expenditures (AE) line is below the 45-degree line at full-employment GDP. This vertical distance is called a(n):

A liquidity trap exists when a change in the money supply immediately and drastically affects interest rates.

a. true b. false

Under conditions of oligopoly, economies of large-scale production mean that: a. firms are able to sell all of the output they desire

b. it is difficult for a firm to determine its profit-maximizing price and output. c. large firms would find it more profitable to break up into smaller production units. d. small firms are at a disadvantage in competing with relatively large firms.