When there is a recessionary gap, capital and labor resources are:
A. decreasing in number.
B. not being fully utilized.
C. producing beyond their capacity.
D. misallocated.
Answer: B
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Dividing fiscal policy into two instruments has the effect of introducing another policy target:
A) the interest rate. B) the national debt. C) the unemployment rate. D) the division of output between public and private spending.
In years of economic contraction, firms throughout the economy increase their production of goods and services, employment rises, and jobs are easy to find
a. True b. False Indicate whether the statement is true or false
The demand curve for labor slopes down because
A) firms value less efficient workers less than they value more efficient workers. B) firms must lower prices to sell the additional units of its product that the extra workers produce. C) of the law of diminishing marginal product. D) of profit maximizing behavior.
Suppose the demand for rental apartments decreased substantially. We would expect to observe
A. no change in rent and a sharp reduction in quantity supplied in the short run, and an even larger decrease in quantity supplied in the long run. B. a small decrease in quantity supplied and significantly lower rents in the short run, and quantity supplied to decrease much more in the long run. C. a large decrease in quantity supplied in the short run and the long run, but much larger reductions in rent in the long run. D. a large decrease in quantity supplied in the short run, followed by a counter-reaction and an increase in quantity supplied in the long run.