You are given the following information about aggregate demand at the existing price level for an economy: (1) consumption = $500 billion, (2) investment = $50 billion, (3) government purchases = $100 billion, and (4) net exports = $20 billion. If the full-employment level of GDP for this economy is $620 billion, then what combination of actions would be most consistent with closing the GDP-gap here?
A. An increase in government purchases and a decrease in taxes
B. A decrease in government purchases and taxes
C. An increase in government purchases and taxes
D. A decrease in government purchases and an increase in taxes
Answer: D
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_____ forces firms in a perfectly competitive market to sell their products at the prevailing market price
a. Pronounced barriers to entry b. The ability to raise prices to levels higher than the marginal cost of production c. A high degree of similarity with competitors' products d. Supernormal profits in the long run
Using the CPI, the rate of inflation can be calculated by
A). 100 x [CPI(current year) - CPI(prior year)] B) [CPI(current year) - CPI(prior year)] x CPI(prior year) C) 100 x [CPI(current year) - CPI(prior year] / CPI(prior year) D) CPI (current year) / CPI (prior year)
Which economic question does the decision to give all of the butter the economy produces to the homeless answer?
a. What to produce? b. How to produce? c. For whom to produce? d. Who has a comparative advantage in butter production? e. Who has an absolute advantage in butter production?
Product differentiation plays an important role in perfect competition
Indicate whether the statement is true or false