Full-employment output is the level of output that is produced when the labor market is in equilibrium
Indicate whether the statement is true or false
TRUE
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The "Big Mac Theory of Exchange Rates" tests the accuracy of the purchasing power parity theory. In July 2015, the Economist reported that the average price of a Big Mac in the U.S. was $4.79
In Sweden, the average price of a Big Mac at that time was 43.7 kronor. What is the "implied exchange rate" between Swedish kronor and U.S. dollars? A) 0.11 kronor per dollar B) 1.90 kronor per dollar C) 9.12 kronor per dollar D) 46.2 kronor per dollar
When an economy is operating well below its full-employment capacity and the marginal propensity to consume is 0.75, a $10 billion increase in investment spending will cause the equilibrium output to rise by:
a. $5 billion. b. $10 billion. c. $20 billion. d. $40 billion.
"Senior citizens deserve an income that will allow them to live in comfort for their remaining years." This is
a. neither a normative nor a positive statement b. both a positive and a normative statement c. strictly a macroeconomic issue d. a positive statement e. a normative statement
An empirical study determines that price exceeds marginal cost at the levels of output of firms in long-run equilibrium in the widget industry. The widget industry may therefore
A. be monopolistically competitive. B. have firms whose goal is sales maximization. C. have firms that act as price leaders. D. All of the responses are correct.