Assume potential GDP is 7T. If the economy is at a short run equilibrium where real GDP is at 8T then there is an ____ and a labor ___
a. expansion; surplus
b. recession; shortage
c. recession; surplus
d. expansion; shortage
Answer: d. expansion; shortage
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An industry with a horizontal long-run supply curve is called a(n) ________ industry.
A. decreasing-profit B. constant-cost C. decreasing-cost D. increasing-cost
Protection makes the people of a country better off.
Answer the following statement true (T) or false (F)
In the circular flow model, households
A) spend earnings from resource sales on goods and services in the product market. B) and firms spend earnings from resource sales on goods and services in the factor market. C) sell goods and services in the input market. D) hire resources sold by firms in the factor market.
If U.S. real GDP grew from $12 trillion one year to $12.7 trillion the next, the annual growth rate would be:
A. 5.8 % B. 94.4 % C. 105.8 % D. 5.5 %