If five firms of similar sizes join to form a cartel, then it is most likely that
A) they will charge a common, lower market price.
B) they will collectively produce less than before.
C) all five firms will earn the same profits as before.
D) all five firms as a group will have falling profits, but increased output.
Answer: B
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The curve labeled A in the above figure is
A) a short-run aggregate supply curve. B) an aggregate demand curve. C) a long-run aggregate supply curve. D) a production possibilities curve.
Which of the following correctly describes how an increase in the price level affects consumption spending?
A) An increase in the price level lowers real wealth, which causes consumption to decrease. B) An increase in the price level raises real wealth, which causes consumption to increase. C) An increase in the price level increases the amount of money a household needs to buy goods and raises the interest rate, which causes consumption to increase. D) An increase in the price level decreases the amount of money a household needs to buy goods and raises the interest rate, which causes consumption to increase.