One reason the U.S. government might subsidize research of an alternative to crude-oil based gasoline is that
A) more substitutes will reduce the price of crude-oil based gasoline.
B) more substitutes will increase the elasticity of crude-oil based gasoline.
C) more substitutes will reduce the impact of supply shocks on the price of crude-oil based gasoline.
D) Any or all of the above.
D
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Under the monetary approach to exchange rate theory, money supply growth at a constant rate
A) eventually results in ongoing price level deflation at the same rate, but changes in this long-run deflation rate do not affect the full-employment output level or the long-run relative prices of goods and services. B) eventually results in ongoing price level inflation at the same rate, but changes in this long-run inflation rate do affect the full-employment output level and the long-run relative prices of goods and services. C) eventually results in ongoing price level inflation at the same rate, but changes in this long-run inflation rate do not affect the full-employment output level or the long-run relative prices of goods and services. D) eventually results in ongoing price level inflation at the same rate, but changes in this long-run inflation rate do not affect the full-employment output level, only the long-run relative prices of goods and services. E) eventually results in ongoing price level deflation at the same rate, but changes in this long-run deflation rate do not affect the full-employment output level, only the long-run relative prices of goods and services.
Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the long run would be:
A. P2 and Y2. B. P1 and Y2. C. P4 and Y2. D. P1 and Y1.