If we observe an increase in real GDP and an increase in the price level after an increase in aggregate demand, we can conclude that
A) the aggregate supply curve is upward sloping.
B) the aggregate supply curve is horizontal.
C) the aggregate supply curve is vertical.
D) the economy is now at full employment.
A
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To maintain a pegged rate, a nation faces a trilemma and must also:
A) generate extra export revenues. B) watch carefully to ensure imports and exports are equal. C) adjust its interest rates and money supply to ensure the home interest rate is equal to the foreign interest rate to prevent pressure on the exchange rate. D) restrict foreign capital inflows and domestic capital outflows.
If demand is perfectly inelastic, the absolute value of the price elasticity of demand is
A) more than one. B) less than one. C) zero. D) equal to the absolute value of the slope of the demand curve.