Assume that an inflationary gap must be closed by reducing aggregate expenditures. If consumers refuse to cut spending on consumption and producers won't cut demand for investment goods, the President:
A. can do nothing.
B. must build more roads.
C. must borrow from Wall Street.
D. must cut government spending.
Answer: D
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In the figure above, when production is 3 units with a price of $3, the consumer surplus equals
A) a + b. B) a + b + f + g. C) a + b + f + g + h + l. D) a + b + f + g + h + l + i + m.
Gross Domestic Product (GDP) per capita is
a. GDP in current dollars b. GDP adjusted for inflation c. GDP per person d. GDP per dollar spent e. GDP per day
The transmission mechanism in an economy alters: a. nominal gross domestic product through changes in the interest rate. b. real gross domestic product through changes in the interest rate
c. real gross domestic product through changes in the price level. d. nominal gross domestic product through changes in the price level.
The direction of the substitution effect is not influenced by whether the good is normal or inferior
a. True b. False Indicate whether the statement is true or false