How will an increase in government expenditures during a recession be reflected in GDP?
a. An increase in government spending will reduce aggregate demand and decrease GDP.
b. An increase in government spending will not affect GDP.
c. An increase in government spending will increase GDP, but only if it is directed toward economically productive projects.
d. The government spending will increase GDP even if the spending encourages rent seeking and other unproductive activities.
D
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An increase in the price level results in a(n) ________ in the quantity of real GDP demanded because ________
A) decrease; a higher price level increases consumption, investment, and net exports. B) increase; a higher price level increases consumption, investment, and net exports. C) decrease; a higher price level reduces consumption, investment, and net exports. D) increase; a higher price level reduces consumption, investment, and net exports.
Assume that maximum feasible hourly productions levels if all resources are utilized in the United States are either 8 yards of fabric or 4 bushels of wheat
Maximum feasible production levels if all resources are utilized in Japan are either 3 yards of fabric or 6 bushels of wheat. Based on this information A) beneficial trade is absolutely impossible between the two countries. B) the United States will benefit from trading but Japan will not. C) both nations will gain from specialization and trade, with the United States exporting wheat and Japan exporting fabric. D) both nations will gain from specialization and trade, with the United States exporting fabric and Japan exporting wheat.
For a given level of inflation, if a rise in the stock market makes consumers more willing to spend, known as the wealth effect, then the ________ shifts ________.
A. short-run aggregate supply line; downward B. aggregate demand curve; right C. aggregate demand curve; left D. short-run aggregate supply line; upward
When the Federal Reserve conducts open-market operations to increase the money supply, it
a. redeems Federal Reserve notes. b. buys government bonds from the public. c. raises the discount rate. d. decreases its lending to member banks.