Suppose the following: (1 ) the wage rate falls, (2 ) business taxes decline, (3 ) any change in SRAS is greater than any change in AD. Based on this information, in the short run Real GDP will __________ and the price level will __________
A) rise; rise
B) fall; rise
C) fall; fall
D) rise; fall
E) none of the above
D
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The amount by which an aggregate expenditures schedule must shift upward to achieve the full-employment real GDP is a(n)
A. recessionary expenditure gap. B. negative net export gap. C. expenditure multiplier gap. D. inflationary expenditure gap.
Government spending programs that create jobs are often popular because
a. the created jobs are highly visible, while the secondary effects of lost jobs in other areas, higher interest rates, and higher future taxes are less visible. b. if a spending program is approved by Congress, it means that the value of what is produced is greater than the value of the resources used to produce it. c. the benefits of job creation are always greater than the costs. Jobs are the key to economic progress. d. when spending programs are funded by
An industry comprising 40 firms, none of which has more than 3 percent of the total market for a differentiated product, is an example of
A) monopolistic competition. B) oligopoly. C) pure monopoly. D) pure competition.
Suppose that Harold buys collision insurance for his car and then drives it recklessly. This is an example of:
A. a positive spillover. B. moral hazard. C. adverse selection. D. irrational behavior.