If equilibrium GDP is $800 billion greater than the full employment GDP and the multiplier is 4, how much is the inflationary gap?
What will be an ideal response?
800/4 = $200 billion
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Describe the principal costs of unemployment. Are there any benefits to unemployment?
What will be an ideal response?
Which of the following federal agencies is NOT engaged in economic regulation?
A) the Federal Reserve B) Federal Aviation Administration C) Food and Drug Administration D) Federal Deposit Insurance Corporation
Suppose there are two firms that make automobiles, Ferrari and General Motors. Ferrari has one assembly plant with only a few hundred employees. General Motors has several assembly plants and thousands of employees. If there are economies of scale in automobile production, which statement is true? a. General Motors should produce fewer cars to improve its efficiency. b. Efficiency allows
General Motors to use fewer raw materials per automobile. c. The output level that makes Ferrari most efficient also makes General Motors most efficient. d. When the ATC curves of the two firms cross, General Motor's ATC curve is falling. e. The average fixed cost curve for Ferrari is higher because they produce fewer cars.
When will stabilization policy be most effective in combating recessions?
a. when AS is flat b. when AS is very steep c. when AS has a moderately upward slope d. when AS has a moderately downward slope.