Construct a graph of the aggregate goods and services market for an economy experiencing the following
a. a recession
b. full employment
c. an economic boom
a. An economy experiencing a recession is depicted by the short-run equilibrium being at a point to the left of the long-run aggregate supply curve. At this point, real GDP is below the full-employment level.
b. An economy at full employment is depicted by the short-run equilibrium being at a point along the long-run aggregate supply curve. At this point, real GDP equals the full-employment level.
c. An economy experiencing an economic boom is depicted by the short-run equilibrium being at a point to the right of the long-run aggregate supply curve. At this point, real GDP is above the full-employment level.
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In Keynes's liquidity preference framework
A) the demand for bonds must equal the supply of money. B) the demand for money must equal the supply of bonds. C) an excess demand of bonds implies an excess demand for money. D) an excess supply of bonds implies an excess demand for money.
Since the mid-1980s, Federal Reserve policies have often been described as attempting
A) accelerated takeoffs. B) sustained growth. C) stalling tactics. D) soft landings.
There is widespread agreement across the political spectrum that the only way to break the cycle of poverty and welfare dependency is to
A. provide abortion on demand. B. put every able-bodied person to work. C. enact a negative income tax. D. throw everyone off welfare.
Comparing the cost of the same basket of goods in different locations:
A. can be used for international price comparisons. B. can create a price index to evaluate purchasing power across different locations. C. is based on the theory of purchasing power parity. D. All of these statements are true.