Microeconomic substitution is impossible for the economy as a whole because a. money is a veil. b. the prices of some goods and services adjust sluggishly in response to changing economic conditions. c. a lower price level increases real wealth, which stimulates spending by consumers and vice-versa. d. real GDP measures the total quantity of goods and services produced by all firms in all markets.

Microeconomic substitution is impossible for the economy as a whole because a. money is a veil. b. the prices of some goods and services adjust sluggishly in response to changing economic conditions. c. a lower price level increases real wealth, which stimulates spending by consumers and vice-versa. d. real GDP measures the total quantity of goods and services produced by all firms in all markets.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Measuring A Nation's Income

Section: Chapter Questions

Problem 9PA

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Suppose that an economy’s production function is Cobb–Douglas with parameter = 0.3 a. What fractions of income do capital and labor receive? b. Suppose that immigration increases the labor force by 10 percent. What happens to total output (in percent)? The rental price of capital? The real wage? c. Suppose that a gift of capital from abroad raises the capital stock by 10 percent. What happens to total output (in percent)? The rental price of capital? The real wage ?
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	a.	money is a veil.
	b.	the prices of some goods and services adjust sluggishly in response to changing economic conditions.
	c.	a lower price level increases real wealth, which stimulates spending by consumers and vice-versa.
	d.	real GDP measures the total quantity of goods and services produced by all firms in all markets.