5) Which of the following is TRUE about the long-run aggregate supply curve?A) It is vertical at the level of potential GDP.B) It shows the relationship between the price level and real GDP when the economy is at full employment.C) It does not shift in response to temporary changes in aggregate demand.D) All of the above are true.6) Suppose the consumption function is given by the equation C= 100 +0.8YD, where YD is disposable income. What isthe marginal propensity to save?A) 0.8C) 100B) 0.2D) 2.07) Which of the following shifts the aggregate demand curve rightward?A) a tax cutB) a decrease in the quantity of money and an increase in interest ratesC) a decrease in government expenditureD) expectations that future incomes will fall

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5) Which of the following is TRUE about the long-run aggregate supply curve? A) It is vertical at the level of potential GDP. B) It shows the relationship between the price level and real GDP when the economy is at full employment. C) It does not shift in response to temporary changes in aggregate demand. D) All of the above are true.

5) Which of the following is TRUE about the long-run aggregate supply curve? A) It is vertical at the level of potential GDP. B) It shows the relationship between the price level and real GDP when the economy is at full employment. C) It does not shift in response to temporary changes in aggregate demand. D) All of the above are true.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

5) Which of the following is TRUE about the long-run aggregate supply curve?
A) It is vertical at the level of potential GDP.
B) It shows the relationship between the price level and real GDP when the economy is at full employment.
C) It does not shift in response to temporary changes in aggregate demand.
D) All of the above are true.
6) Suppose the consumption function is given by the equation C= 100 +0.8YD, where YD is disposable income. What is
the marginal propensity to save?
A) 0.8
C) 100
B) 0.2
D) 2.0
7) Which of the following shifts the aggregate demand curve rightward?
A) a tax cut
B) a decrease in the quantity of money and an increase in interest rates
C) a decrease in government expenditure
D) expectations that future incomes will fall

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