Refer to the information provided in Figure 30.2 below to answer the question(s) that follow.
Figure 30.2Refer to Figure 30.2. Labor productivity at time t1 is
A. larger than labor productivity at time t2.
B. larger than labor productivity at time t4.
C. larger than labor productivity at time t3.
D. larger than labor productivity at time t2, but less than labor productivity at time t3.
Answer: C
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If output equals 50,000 and full employment real GDP equals 45,000, then this economy has a(n)
A. demand gap. B. employment gap. C. recessionary gap. D. inflationary gap.
Suppose equilibrium income in an economy decreases by $600 as a result of a change in government spending. If the multiplier is 3, what is the change in government spending?
a. Government spending will decrease by $1,800. b. Government spending will decrease by $600. c. Government spending will decrease by $200. d. Government spending will increase by $400. e. Government spending will increase by $1,200.
Keynesian policy suggests that if inflationary rises in the price level are a concern, the response would be contractionary fiscal policy, using tax increases or government spending cuts to shift AD to the left. What would the result be in this scenario?
a. The result would be downward pressure on the price level, very little reduction in output but a large rise in unemployment. b. The result would be downward pressure on the price level, but very little reduction in output or very little rise in unemployment. c. The result would be downward pressure on the price level, a large reduction in output but very little rise in unemployment. d. The result would be downward pressure on the price level, but a large reduction in output and a large rise in unemployment.
One question that arises when determining for whom goods and services should be produced is:
A) Who gets how much of the economic pie? B) How can we import more goods for domestic consumption? C) How can we reduce exports so as to leave more goods for domestic consumption? D) Should society outlaw child labor?