In a classical model
A) equilibrium real GDP is demand determined.
B) equilibrium real GDP is neither determined by aggregate supply nor by aggregate demand.
C) equilibrium real GDP is determined by both aggregate supply and aggregate demand.
D) equilibrium real GDP is supply determined.
D
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The output of a bakery is 250 loaves of bread, when 10 workers are employed. If one more worker is hired, the total output increases to 275 loaves
Given that labor is the only variable input that the bakery uses, and the market wage rate is $10, calculate the marginal cost when employment is increased from 10 to 11 workers.
Because prices are slow to move in the short-run, when the Federal Reserve lowers the federal funds rate
A) nominal interest rates rise. B) real interest rates fall. C) inflation falls. D) real interest rates rise.