If the expenditure schedule must be shifted upward to reach potential GDP, then the economy is experiencing a(n)
a. inflationary gap.
b. precautionary gap.
c. recessionary gap.
d. expansionary gap.
c
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List and explain the three subgroups of the Federal Reserve System
What will be an ideal response?
If perfectly competitive firms are maximizing their profit and are making an economic profit, the market ________ in a short-run equilibrium and ________ in a long-run equilibrium
A) is; is B) is; is not C) is not; is D) is not; is not E) is; might be
Suppose the government deficit increases, but the interest rate remains the same. Which of the following things might have happened simultaneously to keep interest rates the same?
a. The government reduces the amount that people may put into savings accounts on which the interest is tax exempt. b. Because they are optimistic about the future of the economy, firms desire to borrow more to purchase physical capital. c. Consumers decide to decrease consumption and work more. d. All of the above could explain why the interest rate would be unchanged.
Assume leisure is an inferior good instead of a normal good. The income effect of a wage increase will lead to a ________ demand for leisure and a ________ labor supply.
A. higher; lower B. higher; higher C. lower; lower D. lower; higher