An economy is at full employment. Which of the following events can create a recessionary gap?
A) an increase in foreign income
B) an increase in taxes
C) a decrease in the quantity of capital
D) a decrease in money wages
B
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The inauguration of a new President often increases the degree of optimism in business firms and households, causing Ap to
A) rise and IS to shift leftward. B) fall and IS to shift leftward. C) fall and IS to increase. D) rise and IS to shift rightward.
When government intervenes in the production process because external costs exist, it typically attempts to shift the industry's
A) demand curve to the right. B) demand curve to the left. C) supply curve to the right. D) supply curve to the left.
Which of the following countries cannot use monetary expansion in order to reduce youth unemployment?
a. South Africa b. Spain c. India d. Greece
Which of the following will enable a nation to obtain a combination of consumer goods and capital goods outside its production possibilities curve?
A. Full employment. B. International specialization and trade. C. Full production. D. Productive efficiency.