Suppose an economy produces gadgets and labor is the only input in production. The question below examines how changes in price are associated with production costs and profit. Remember the profit per unit of production is defined as: Profit per Unit = Price - Cost per Unit    1.1.  True or False: If the price of gadgets rises and the nominal money wage remains unchanged, production will increase, implying an upward-sloping aggregate supply curve.           True     False  Suppose an economy produces gadgets and labor is the only input in production. The question below examines how changes in price are associated with production costs and profit. Remember the profit per unit of production is defined as: Profit per Unit = Price - Cost per Unit    1.2.  If the nominal money wage rises from $10 to $11 an hour, which of the following occurs? (Assume that one hour of labor produces one unit.)         A.  The cost of production decreases.   B.  Firms will hire more workers.   C.  Firms will increase production.   D.  Profit per unit decreases by $1 for a given price.   E.  Profit per unit increases by $1 for a given price. For the screen shot below: The graph on the left illustrates the relationship between expenditure, C + I + G +(X - IM), and GDP in an economy. The graph on the right illustrates the relationship between aggregate demand and aggregate supply in this economy. Assume that potential GDP is 400. The United States enjoyed low inflation and high economic growth for much of the 1990s.    4.2.  True or False: The U.S. experience during the 1990s can be explained by a sharp increase in oil prices.           True     False  7.  Assuming an upward-sloping aggregate supply curve, a rise in aggregate demand causes:         A.  A larger multiplier effect...
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