"The level of employment in an economy determines its real GDP, other things held constant." Do you agree or disagree? Why? What assumptions are necessary for your conclusion based on the classical model?
What will be an ideal response?
Agree. Production requires workers so the more workers that are employed the greater total production. This assumes that workers who are employed actually work and are productive.
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A change in the price of one good results in a rotation of the budget line, so that it is steeper or flatter.
Answer the following statement true (T) or false (F)
The existence of rating agencies has
A) lowered returns on corporate bonds. B) raised returns on corporate bonds. C) left returns on corporate bonds largely unaffected. D) raised returns on both corporate bonds and Treasury securities.
The formula for calculating real GDP = (price index/nominal GDP) 100
a. True b. False Indicate whether the statement is true or false
What are the two tools of fiscal policy that governments can use to affect the level of aggregate demand?
A. government spending and taxation B. government spending and technology improvements C. taxation and controlling imports D. taxation and controlling exports