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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Sammy has a drone that he values at $1,500. Frank values the same drone at $1,000. The government offers a subsidy of $800 to the buyers of drones, and Sammy and Frank agree on a price of $1,600. The cooperative surplus for Sammy and Dean will be
A) $200. B) $300. C) $600. D) $800.
Periods of price deflation, such as the Great Depression, are characterized by
A) low nominal rates but high real rates of interest. B) low nominal and real interest rates. C) real rates of interest lower than the nominal rate of interest. D) high nominal and real rates of interest.
What is the estimated effect of unemployment insurance on the period of unemployment?
a. It shortens the period of unemployment. b. It lengthens the period of unemployment. c. It negates an individual’s unemployment status. d. It has no effect on the period of unemployment.
Using the expenditure method to estimate GDP, we would include:
A. consumption, investment, government purchases, and net exports. B. consumption, government revenues, durable goods, and net exports. C. consumption, investment, government purchases, and imports. D. consumption, investment, government purchases, and exports.