When potential GDP increases, is it necessarily the case that real GDP increases as well? Explain
What will be an ideal response?
An increase in potential GDP is a result of an expanding labor force, growth in the capital stock, and technological change. The actual level of real GDP may be higher or lower than potential GDP. If firms are all producing at capacity, we would expect potential GDP and real GDP to be equal. If firms are producing below capacity, we would expect real GDP to be below potential GDP. And if firms are temporarily producing above capacity, real GDP will be above potential GDP.
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If the value of the government multiplier is 1.5, which of the following is likely to be true if all other variables remain unchanged?
A) A $1 increase in government expenditure reduces gross domestic product by $1.50. B) A $1.50 increase in government expenditure increases gross domestic product by $1.50. C) A $1.50 increase in government expenditure reduces gross domestic product by $1.50. D) A $1 increase in government expenditure increases gross domestic product by $1.50.
GDP equals
A) aggregate expenditure. B) aggregate income. C) the value of the aggregate production in a country during a given time period. D) all of the above.
What does it mean if an industry has external diseconomies?
What will be an ideal response?
One of the merits of plurality voting is:
A. its simplicity. B. it has all four criteria for an ideal voting system. C. it guarantees the best option will win. D. it produces a result that most participants are happy with.