Suppose Embryonica is an LDC with few skilled workers, a primitive banking system, and very little electric power. What do we know for sure that Embryonica is lacking?
a. Infrastructure.
b. Political stability.
c. Agricultural sector.
d. Traditional values.
e. Poverty.
QUESTION 2Along the short-run aggregate supply curve (SRAS), an increase (rightward shift) in the aggregate demand curve will increase:
a. both the price level and real GDP.
b. real GDP without raising the price level.
c. the price level without affecting real GDP.
d. the price level but reduce real GDP.
QUESTION 3If the required reserve ratio is 10 percent, 1,000 cash deposited into a checkable deposit account will generate, assuming willing borrowers, an increase in the money supply of:
a. 900.
b. 1,100.
c. 9,000.
d. 10,000.
e. 11,000.
QUESTION 4Of the following choices, which is the best example of a nation's economic infrastructure?
a. Natural resources.
b. Highway system.
c. Government.
d. Religious and cultural beliefs.
e. Population growth rate.
QUESTION 5Beginning from a position of long-run equilibrium at the full-employment level of real GDP, the economy's short-run response to an increase in the aggregate demand curve would be:
a. a movement upward along the short-run aggregate supply curve.
b. a movement upward along the long-run aggregate supply curve.
c. a downward shift in the short-run aggregate supply curve.
d. a shift in both the aggregate demand curve and the short-run aggregate supply curve with a movement along the long-run aggregate supply curve.
e. no change, since the economy is already in equilibrium.