Once wartime spending is under way and production is diverted away from household consumption items and private investment goods,
(a) real Gross National Product will likely fall.
(b) the money supply will automatically increase.
(c) inflation will likely rear its ugly head if productivity
does not advance.
(d) production and employment will fall.
(c)
You might also like to view...
Explain how affirmative action programs can produce both desirable incentives as well as disincentives when it comes to investing in education
What will be an ideal response?
A relatively flat LM curve implies that wide fluctuations in the goods sector cause
A) wide fluctuations in real output. B) wide fluctuations in the price level. C) wide fluctuations in the interest rate. D) crowding out of private investment.
Financial innovations such as direct deposit of paychecks, electronic payment of bills, and automated teller machines (ATMs) have likely ________
A) had minimal effect on M1 and M2 B) reduced the size of M2 relative to M1 C) increased both M1 and M2 relative to GDP D) caused the growth rates of M1 and M2 to become more stable E) reduced the size of M1 relative to M2
Caroline is the owner of a hair-styling salon and spa. She decides to raise the wages of her workers even though she faces an excess supply of labor. Her decision
a. might increase profits if it attracts a better pool of workers to apply for jobs at her salon. b. will increase the excess supply of labor. c. may increase the quality of her work force. d. All of the above are correct.