Which of the following is an example of an increase in government purchases?
a. The government builds new roads.
b. The Federal Reserve purchases government bonds.
c. The government decreases personal income taxes.
d. The government increases unemployment insurance benefit payments.
a
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If current unemployment is close to the natural rate of unemployment, the level of real GDP is likely to be close to the level of potential output
Indicate whether the statement is true or false
The production possibilities frontier is the boundary between the
A) rational and irrational choices facing a society. B) wanted and unwanted combinations of goods and services. C) goods and services that the economy can produce. D) affordable and unaffordable combinations of production. E) attainable and unattainable combinations of goods and services.
If both the production of goods and services increase and prices rise, then the change in nominal GDP
A) definitely understates the change in production. B) definitely accurately reflect the change in production. C) definitely overstates the change in production. D) either understates or might accurately reflect the change in production. E) More information is needed to determine how the change in nominal GDP compares to the change in production.
Refer to above figure. If manufacturing labor were to increase to OmL2, how much value would the economy as a whole gain?
What will be an ideal response?