In the intermediate range of the aggregate supply curve, if government spending increases caused the aggregate demand curve to shift outwards, which of the following ismostlikely to occur?
A. The price level and real GDP will both rise.
B. The price level will not change, but real GDP will increase.
C. The price level will rise, but real GDP will not change.
D. Both the price level and real GDP will not change.
Answer: A
You might also like to view...
Assume a firm employs 10 workers and pays each $15 per hour. Further assume that the MP of the 10th worker is 5 units of output and that the price of the output is $4. According to economic theory, in the short run
A) the firm should hire additional workers. B) the firm should reduce the number of workers employed. C) the firm should continue to employ 10 workers. D) More information is required to answer this question.
Which of the following characterizes the largest difference between the way decisions are made in the private sector versus the public sector?
A) The incentive system for individuals to perform efficiently are vastly different. B) The workers themselves are really quite different types of people. C) In both sectors individuals will try to maximize their own individual gains over the gains of others. D) Costs and resources are vastly different in each sector.