When potential GDP increases, is it necessarily the case that real GDP increases as well? Explain
What will be an ideal response?
An increase in potential GDP is a result of an expanding labor force, growth in the capital stock, and technological change. The actual level of real GDP may be higher or lower than potential GDP. If firms are all producing at capacity, we would expect potential GDP and real GDP to be equal. If firms are producing below capacity, we would expect real GDP to be below potential GDP. And if firms are temporarily producing above capacity, real GDP will be above potential GDP.
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Open market operations are conducted by the Fed
A) in the New York Stock Exchange. B) in the private secondary U.S. securities market. C) through the Washington location of the Federal Reserve's Bank of Governors. D) through the Bureau of Engraving.
Adam makes $25,000 per year and Bob makes $45,000 a year, and they both have the same marginal benefit curve. According to the utilitarian view, if a dollar is transferred from Bob to Adam, then
A) the change in Adam's marginal benefit plus the change in Bob's marginal benefit is negative. B) Adam's marginal benefit increases by more than Bob's marginal benefit decreases. C) the change in Adam's marginal benefit plus the change in Bob's marginal benefit equals zero. D) Adam's marginal benefit decreases by more than Bob's marginal benefit increases.
One fundamental difference between New Classical and the New Keynesian macroeconomics is that the New Keynesians model firms as ________ competitive price ________
A) perfectly, setters B) perfectly, takers C) imperfectly, setters D) imperfectly, takers
The law of diminishing marginal productivity implies that identical increases in all inputs eventually will result in smaller incremental increases in total output.
Answer the following statement true (T) or false (F)