An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase
B. increase; increase
C. decrease; decrease
D. increase; decrease
Answer: D
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A decrease in the number of dry cleaners in an area can be represented by a(n)
a. downward movement along the dry cleaning supply curve b. upward movement along the dry cleaning supply curve c. leftward shift in the dry cleaning supply curve d. rightward shift in the dry cleaning supply curve e. vertical dry cleaning supply curve
If government spending were to increase we expect that the aggregate demand curve will:
A. shift to the right. B. remain unchanged but the economy will move down along the curve to a higher quantity. C. remain unchanged but the economy will move down along the curve to a lower quantity. D. shift straight down.
Explain the differences among the frictional, structural, and cyclical forms of unemployment.
What will be an ideal response?
How do expectations about the future by households and businesses affect the effectiveness of fiscal policy? Cite examples.
What will be an ideal response?