Which statement is FALSE? a.If an economy is in a depression, an increase in out
ID: 1193297 • Letter: W
Question
Which statement is FALSE?
a.If an economy is in a depression, an increase in output will have no effect on the aggregate price level.
b.If an economy faces a horizontal aggregate supply curve, large numbers of machines must be sitting idle or must be underused
c.A rightward shift of the long-run aggregate supply curve represents economic growth.
d.Increased trade and globalization have shifted the long-run aggregate supply curve to the left.
a.If an economy is in a depression, an increase in output will have no effect on the aggregate price level.
b.If an economy faces a horizontal aggregate supply curve, large numbers of machines must be sitting idle or must be underused
c.A rightward shift of the long-run aggregate supply curve represents economic growth.
d.Increased trade and globalization have shifted the long-run aggregate supply curve to the left.
Explanation / Answer
a. true, If an economy i in depression, an increase in aggregate output will have no effect on aggregae price level. It would imply increase in equilibrium quantity without corresponding change in equilibrium aggregate price level.
b. False, If an economy faces a horizontal aggregate supply curve, it means all productive rsources in the economy are fully employed and output can not be increased further.
c. True, A rightward shift in aggregate supply curve means that total output has increased for all goods and sevices. it implies economic growth.
d. False, Increased trade and globalization have shifted the long run aggregate supply curve to the right.
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