Each firm in a cartel has an incentive to chisel because market price exceeds:

In the Keynesian model, the real wage is mildly procyclical because

A) demand for labor fluctuates with the demand for final goods. B) firms take advantage of recessions to pay slightly lower wages, since there's excess labor supply. C) workers' effort may depend on the unemployment rate and the real wage. D) the supply of labor fluctuates with the business cycle.

If the economy is operating at a point at which short-run aggregate supply is horizontal, then

A) real GDP cannot expand. B) real GDP cannot contract. C) increases in aggregate demand do not increase the price level. D) then increases in aggregate demand do not increase real GDP.