The main reason why the economy’s aggregate supply curve slopes upward is that
A. as the price level rises, businesses incur additional costs.
B. businesses typically purchase labor and other inputs under long-term contracts that fix the cost of the input in money terms.
C. as the price level rises, workers have higher real wages to spend for additional consumer goods.
D. All of these responses are correct.
Answer: B
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Prior to the 1970s, the demand for money (M1 ) was
A) relatively stable. B) unpredictable. C) constant. D) unmeasurable.
What is the difference between nominal and real GDP?
a. Nominal GDP is adjusted for changes in the price level; real GDP is not. b. Real GDP is adjusted for taxes and transfer payments; nominal GDP is not. c. Real GDP is adjusted for changes in the price level; nominal GDP is not. d. Nominal GDP is adjusted for depreciation; real GDP is not. e. Real GDP is adjusted for depreciation; nominal GDP is not.