Compared to the averages for post World War II recessions, the recession of 2007-2009 was ________ in duration and the decline in real GDP was ________
A) longer; greater
B) longer; smaller
C) shorter; greater
D) shorter; smaller
Answer: A
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Which of the following is an example of a negative externality (additional social cost)?
A. an increase in the value of land you own when a nearby development is completed B. the costs paid by a company to build an automated factory C. the higher price you pay when you buy a heavily advertised product D. falling property values in a neighborhood where a disreputable nightclub is operating
The government of Eduland provided generous unemployment benefits to all the unemployed workers. However, the new government that came into power reduced the amount of unemployment insurance paid to each worker
This increased the average number of hours spent daily by unemployed workers in looking for jobs. This suggests that ________ exists in the labor market in Eduland. A) the problem of moral hazard B) a tragedy of the commons C) a pecuniary externality D) a positive externality
Refer to the above figure. Suppose the economy is operating at point A. There is a recessionary gap of ________, which can be closed by ________
A) $3 trillion; increasing government spending by $1 trillion B) $1 trillion; expansionary fiscal policy that shifts the short-run aggregate supply curve through point C C) $2 trillion; expansionary fiscal policy that generates another $2 trillion in total spending D) $2 trillion; an increase in government spending of $14 trillion
If population grows faster than GDP, then per capita GDP must fall
a. True b. False Indicate whether the statement is true or false