To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change.
B. increase.
C. decrease.
D. either increase or decrease depending on the relative shifts of AD and AS.
Answer: C
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Classical growth theory predicts
A) a slowdown in population growth over time. B) sustained increases in economic growth in the long run. C) sustained increases in the standard of living in the long run. D) real GDP per person will remain at the subsistence level over time. E) the population growth rate slows as real GDP per person rises.
Which of the following is NOT an example of a good with an external cost?
A) electricity generation producing carbon dioxide emissions that contribute toward global warming B) logging that pollutes a nearby river C) Jess smoking near her non-smoking roommate D) Ahmed working at a bank and getting a flu shot each fall E) noise pollution from aircraft
Which of the following equations will always represent GDP in an open economy?
a. S = I - G b. I = Y - C + G c. Y = C + I + G d. Y = C + I + G + NX
In the basic Keynesian model all of the following are true EXCEPT:
A. planned net exports always equal actual net exports. B. planned investment always equals actual investment. C. planned consumption always equals actual consumption. D. planned government spending always equals actual government spending.