Aggregate supply is the same thing as:
a. total national spending.
b. total domestic production.
c. aggregate demand.
d. a supply shock.
Ans: b. total domestic production.
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Suppose the cost of raw materials used by the cotton industry rises to a larger extent compared to the increase in demand in the market. Which of the following situations will arise?
a. The incidence of the higher cost will fall completely on the consumers. b. The incidence of the higher cost will fall completely on the high cost firms. c. The incidence of the higher cost will fall completely on the low cost firms. d. The incidence of the higher cost will fall partially on the consumers and partially on the sellers.
Which of the following is true? a. Voluntary trades give both parties more in value than what they give up
b. Without the ability to trade, people would not tend to specialize as much in those areas where they had a comparative advantage. c. People can gain by specializing in the production of the good in which they have a comparative advantage. d. All of the above are true.