Potential output in an economy is dependent upon which of the following factors?
a. the given supply of resources
b. rate of unemployment
c. nominal wages
d. potential output is not dependent on any of the previous factors
a
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In 1990-1991, the government budget deficit ________ mainly due to the ________
A) rose, recession's effect on tax collection B) rose, expenditures of the Persian Gulf War C) fell, recession's effect on government expenditures D) fell, economic stimulus provided by the Persian Gulf War
If the short-run Phillips curve was a straight line with a very steep slope, the inflation costs of reducing unemployment: a. are fairly low
b. are fairly high. c. depend on the current rate of inflation. d. rises as the economy approaches full employment.
If consumption changes because of a change in a factor other than the price level, then the
A) economy moves from one point on an AD curve to another point on the same curve. B) AD curve shifts. C) economy moves from one point on a short-run aggregate supply (SRAS) curve to another point on the same curve. D) SRAS curve shifts. E) none of the above
Suppose the rate of inflation unexpectedly decreases from 6% to 4%. Which one of the following would most likely benefit from this unexpected reduction in the rate of inflation?
A. creditors. B. debtors. C. workers who are covered by a COLA agreement. D. a borrower whose loan has a fixed nominal interest rate.