________: the situation where equilibrium GDP is less than full employment output
Fill in the blank(s) with correct word
Recessionary gap
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Refer to Scenario 9.3 below to answer the question(s) that follow. SCENARIO 9.3: Investors put up $520,000 to construct a building and purchase all equipment for a new restaurant. The investors expect to earn a minimum return of 10 per cent on their investment. The restaurant is open 52 weeks per year and serves 900 meals per week. The fixed costs are spread over the 52 weeks (i.e. prorated weekly). Included in the fixed costs is the 10% return to the investors and $1,000 per week in other fixed costs. Variable costs include $1,000 in weekly wages and $600 per week for materials, electricity, etc. The restaurant charges $5 on average per meal. Refer to Scenario 9.3. Total fixed costs per week are
A. $1,000. B. $2,000. C. $3,000. D. $4,500.
Arguments against the balanced budget amendment include which of the following?
A) A balanced budget amendment would increase capital formation. B) A balanced budget amendment would exert fiscal discipline on the federal government. C) A balanced budget amendment would limit Congress' ability to use fiscal policy during a recession. D) A balanced budget amendment would reduce the taxation burden on future generations.
In an economy, the government wants to decrease aggregate demand by $48 billion at each price level to decrease real GDP and control demand-pull inflation. If the MPC is 0.75, then it could
A. increase taxes by $24 billion. B. decrease government purchases by $16 billion. C. decrease government purchases by $10 billion. D. increase taxes by $16 billion.
A firm's market power decreases if the price elasticity of demand for its product
A. increases. B. decreases. C. equals the income elasticity of demand. D. stays the same over time.