Problem 1: Aggregate supply reflects billions of production decisions made by:
- consumers when they decide which products to purchase.
- households and firms, because they each demand goods and services.
- the largest firms and largest households.
- households, which demand resources, and firms, which supply resources.
- resource suppliers and firms.
Problem 2: In the long run, equilibrium output:
- occurs when the economy has high levels of unemployment.
- equals aggregate supply, and the equilibrium price depends on the aggregate demand curve.
- is when actual aggregate expenditures equal real GDP.
- occurs when inventories of goods and services are increasing.
- occurs when wages are sticky.
Problem 3: If the MPC < 1 and a household's disposable income increases by $2,000, the household's consumption will:
- increase by less than $2,000.
- increase by $2,000.
- decrease if the family was wealthy before the income change.
- remain the same unless the change in income significantly affects the household's wealth.
- remain the same.