When input prices adjust slowly, the multiplier is smaller.
Answer the following statement true (T) or false (F)
False
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Income on the horizontal axis at which the vertical distance to the 45-degree line is less than the vertical distance to the Ep line gives rise to ________-than-equal planned expenditures, and so we must be ________ the equilibrium level of income
A) less, below B) less, above C) greater, below D) greater, above
The accepted philosophy on U.S. federal deficits prior to the Great Depression was that: a. the budget should be balanced cyclically
b. a budget deficit does not matter as long as the economy is at full employment. c. the budget should be annually balanced. d. deficits dampen aggregate demand in the short run and reduce the federal debt. e. spending decreases during expansions and increases during recessions.
The Phillips curve relationship can also be seen indirectly from the AD/AS model
a. True b. False Indicate whether the statement is true or false
Business cycles
A. have been a recurring source of debate to economic theory throughout history. B. represent a fairly recent problem confronting economic systems. C. show very regular and smooth patterns of ups-and-downs in economic systems. D. cannot occur in market-based economic systems. E. have been increasingly unstable over the past half century.