A change in household indebtedness will cause a movement along an existing aggregate demand curve.
Answer the following statement true (T) or false (F)
False
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If the economy is on its short-run Phillips curve at the natural unemployment rate, then in the AS-AD model, real GDP is definitely
A) decreasing. B) greater than potential GDP. C) less than potential GDP. D) increasing. E) equal to potential GDP.
Which of the following is true for taxes? They
A) are always administered fairly. B) are a necessary part of living in an economy with a fair distribution of income. C) are always administered without creating unfairness or inefficiency. D) are an involuntary transfer of private property. E) do not create a big tradeoff problem.
When the unemployment rate is less than the natural unemployment rate
A) the output gap is positive. B) the output gap equals zero. C) the output gap is negative. D) None of the above is possible because it is impossible for the unemployment rate to be less than the natural rate.
If Australia has relatively more land per worker, and Belgium has relatively more capital per worker, then if trade began between these two countries
A) the relative price of the land-intensive product would increase in Australia. B) the relative price of the capital-intensive product would increase in Australia. C) the relative price of the land-intensive product would increase in Belgium. D) the relative price of the capital-intensive product would decrease in Belgium. E) relative product prices would diverge between Australia and Belgium.