An increase in the amount of physical capital will cause
A) an increase in both aggregate demand and real GDP, but have no effect on the price level.
B) an increase in both aggregate supply and real GDP, but have no effect on the price level.
C) aggregate demand and aggregate supply to increase by the same amounts, causing real GDP to increase and the price level to remain constant.
D) an increase in both aggregate supply and real GDP and a reduction in the price level.
Question 2
Which of the following statements identifies a correct reason for demographic transition?
A) The increase in migration of labor from urban to rural areas reduces fertility.
B) Transition from a rural economy to an urban economy reduces income below subsistence that reduces fertility and the size of families.
C) The cost of rearing children is comparatively lower for urban families in comparison to rural families.
D) The dependence on child labor is negligible in urban families in comparison to rural families.
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