Explain why each of the following statements is True, False, or Uncertain according to economic principles. Use diagrams where appropriate. Unsupported answers will receive no marks. It is the explanation that is important.
A5-7. An economy with only price taking firms will have a horizontal short-run aggregate supply curve.
A5-8. A given increase in aggregate demand has a larger effect on national income the less steeply do unit costs rise with increases in production.
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