In the classical model, an increase in aggregate demand will cause
A) an increase in actual output, or Gross Domestic Product (GDP).
B) a decrease in actual output, or Gross Domestic Product (GDP).
C) a decrease in price level.
D) an increase in price level.
D
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Suppose a perfectly competitive market is in short-run equilibrium. Firms that are incurring a ________ economic loss ________
A) persistent; increase their output to increase their profit B) temporary; exit the industry C) temporary; decrease their production but definitely stay open D) persistent; exit the industry and shift the market supply curve leftward E) persistent; exit the industry and shift the market supply curve rightward
When the United States cannot produce all of the goods and services desired by its citizens, the economy is
A) in a deep freeze. B) inefficient. C) in a shortage state. D) facing scarcity.