When a recessionary gap occurs
a. real output exceeds the natural level of output, and unemployment exceeds its natural rate
b. real output exceeds the natural level, and unemployment is less than its natural rate
c. real output is less than the natural level of output, and unemployment exceeds it natural rate
d. real output is less than the natural level of output, and unemployment is less than its natural rate
Answer: c. real output is less than the natural level of output, and unemployment exceeds it natural rate
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Should countries specialize in producing goods and services based on having a comparative advantage or an absolute advantage? Why?
What will be an ideal response?
In the Keynesian model,
a. the autonomous expenditure multiplier is lower than the tax multiplier. b. the autonomous tax multiplier is positive and large. c. the autonomous tax multiplier is larger (in absolute value) than the tax multiplier. d. the tax multiplier is equal to 1. e. none of the above.
no matter what our objectives in life, they are easier to achieve if we have more wealth.
What will be an ideal response?
If households' income taxes are cut, how are households likely to respond?
A decrease in consumption expenditure A decrease in saving Push the economy into recession An increase in consumption expenditure