The concept of opportunity cost in a fully employed economy with technology and resources held constant tells us that
a. expansion of output in one industry means expansion cannot occur in another industry.
b. expansion of output in one industry means output in another industry must contract.
c. output cannot be increased in any industry.
d. output of all industries must contract until more resources are found.
b
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The new Keynesian sticky-price theory indicates that an increase in aggregate demand generates
A) a speedy rise in real GDP but a sluggish increase in the price level. B) a speedy rise in the price level but a sluggish increase in real GDP. C) sluggish increases in both real GDP and the price level. D) rapid increases in both real GDP and the price level.
Define the following terms and explain their importance to the study of macroeconomics. a. Exchange rate b. Depreciation c. Devaluation d. Fixed exchange rates
What will be an ideal response?