Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output
B. D; an expansionary
C. B; recessionary
D. D; a recessionary
Answer: D
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What is potential GDP and what is the relationship between actual and potential real GDP?
What will be an ideal response?
The amount of output that a firm decides to sell has no effect on the market price in a competitive industry because
A) the market price is determined (through regulation) by the government B) the firm supplies a different good than its rivals C) the firm's output is a small fraction of the entire industry's output D) the short run market price is determined solely by the firm's technology E) the demand curve for the industry's output is downward sloping
The short-run aggregate supply line is:
A. upward sloping. B. downward sloping. C. horizontal at the current rate of inflation. D. vertical at the economy's potential output.
Which of the following statements is most accurate?
A. Central bank statements in developed countries differ in length but are similar in the speed with which policy changes are announced. B. Central bank statements in developed countries are similar both in length and in the speed with which policy changes are announced. C. Central bank statements in developed countries differ both in length and in the speed with which policy changes are announced. D. Central bank statements in developed countries are similar in length but differ in the speed with which policy changes are announced.