An economy that self-corrects an expansionary gap will experience stagflation
a. True
b. False
Indicate whether the statement is true or false
True
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Describe the choices that consumers make and explain why consumers are efficient on the market demand curve
What will be an ideal response?
A movement along the production possibilities curve would imply that
A) the labor force has grown. B) productivity has increased. C) society has chosen a different set of outputs. D) productivity has declined because workers are demanding more leisure.
The expenditure multiplier explains how a change in
A. real GDP leads to a change in induced expenditure. B. induced expenditure leads to a change in real GDP. C. real GDP leads to a change in autonomous expenditure. D. autonomous expenditure leads to a change in real GDP. E. induced expenditure leads to a change in autonomous expenditure.
Discretionary fiscal policy
A. would have a larger effect on real GDP if the multiplier was smaller. B. may not have desired effects on real GDP because it leads to increases in aggregate demand. C. may not have desired effects on real GDP because of the time lags. D. may not have desired effects on real GDP because it leads to decreases in aggregate demand.