According to the aggregate supply-aggregate demand model, an expansionary fiscal policy will, in the long run,
a. have the opposite effect of an expansionary monetary policy
b. increase both real GDP and the price level
c. increase real GDP and decrease the price level
d. increase real GDP and leave the price level unchanged
e. increase the price level and leave real GDP unchanged
E
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In an oligopolistic market, each firm
A) has a constant marginal cost. B) faces a perfectly elastic demand function. C) must consider the reaction of rival firms when making a pricing or output decision. D) produces at minimum average cost in the long run.
The insider-outsider model argues that:
a. a firm depends on its insiders to grease the wheels of the organization, to be familiar with routine procedures, to train new employees, and so on. b. employers will try to keep wages from falling when the economy is weak or the business is having trouble, and employees will not expect huge salary increases when the economy or the business is strong. c. the productivity of workers will increase if they are paid more, and so employers will often find it worthwhile to pay their employees somewhat more than market conditions might dictate. d. if an employer increases the wage for all workers, then the best workers with the best employment alternatives at other firms are more likely to leave, while the least attractive workers, with fewer employment alternatives, are more likely to stay.
If over a short time there is an increase in the number of people retired and a decrease in the number of people working, then productivity
a. and real GDP per person rise. b. rises but real GDP per person falls. c. falls and real GDP per person rises. d. and real GDP per person fall.
If the government increases spending without a tax increase and simultaneously no monetary policy changes are made, which of the following will most likely occur?
a) income would not rise at all because no new money in available for increased consumer spending b) the rise in income may be greater than the multiplier would predict because the higher interest rates will stimulate investment spending c) the rise in income may be smaller than the multiplier would predict because the higher interest rates will crowd-out private investment spending d) income will go up by exactly the amount of the new government spending since this acts as a direct injection to the income stream e) income will not go up unless taxes are cut as well