Questions from General Economics

Q: True or False: Decreases in AD normally lead to decreases in

True or False: Decreases in AD normally lead to decreases in both output and the price level.

Q: Assume that (a) the price level is flexible upward but

Assume that (a) the price level is flexible upward but not downward and (b) the economy is currently operating at its full-employment output. Other things equal, how will each of the following affect...

Q: True or False: If the price of oil suddenly increases by

True or False: If the price of oil suddenly increases by a large amount, AS will shift left, but the price level will not rise thanks to price inflexibility.

Q: “Monopolistic competition is monopolistic up to the point at which consumers

“Monopolistic competition is monopolistic up to the point at which consumers become willing to buy close-substitute products and competitive beyond that point.” Explain.

Q: Suppose that consumer spending initially rises by $5 billion for every

Suppose that consumer spending initially rises by $5 billion for every 1 percent rise in household wealth and that investment spending initially rises by $20 billion for every 1 percentage point fall...

Q: Answer the following questions on the basis of the three sets of

Answer the following questions on the basis of the three sets of data for the country of North Vaudeville: a. Which set of data illustrates aggregate supply in the immediate short run in North Vaude...

Q: Irving owns a chain of movie theaters. He is considering whether

Irving owns a chain of movie theaters. He is considering whether he should build a new theater downtown. The expected rate of return is 15 percent per year. He can borrow money at a 12 percent interes...

Q: Suppose that the aggregate demand and aggregate supply schedules for a hypothetical

Suppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are as shown below: a. Use these sets of data to graph the aggregate demand and aggregate supply curves. W...

Q: Suppose that the table below shows an economy’s relationship between real output

Suppose that the table below shows an economy’s relationship between real output and the inputs needed to produce that output: a. What is productivity in this economy? b. What is t...

Q: Refer to the data in the table that accompanies Problem 2.

Refer to the data in the table that accompanies Problem 2. Suppose that the present equilibrium price level and level of real GDP are 100 and $225, and that data set B represents the relevant aggregat...