Which of the following is associated with an increase in potential output?
A. An increase in the target inflation rate
B. A decrease in the target rate of capacity utilization
C. An increase in the target rate of unemployment
D. A decrease in the target rate of unemployment
Answer: D
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Refer to the figure above. What is the domestic price of pens in Lithasia?
A) $1 B) $2 C) $3 D) $6
Suppose the economy is currently operating at potential output; an expansionary gap may be caused by each of the following except:
A. a positive demand shock B. a positive inflation shock C. an increase in govt spending D. an increase in the inflation rate
Figure 5-5
Figure 5-5 shows a consumer budget line for french fries and hamburgers. The price of an order fries is $2. The price of a burger is
a.
$1.
b.
$2.
c.
$4.
d.
$8.
The MPC in the U.S. economy has been estimated to be near 0.95. If this is an accurate measure, then the numerical value for the multiplier would be
A. 0.9. B. 1.8. C. 9.5. D. 10.0. E. 20.0.