If actual investment exceeds desired investment, then
A. A recession can develop.
B. Leakages are greater than injections.
C. Leakages are equal to injections.
D. An inflationary spiral can develop.
Answer: A
You might also like to view...
Explain how we "read" the three graphs in Figs. A1.1 and A1.2
What will be an ideal response?
A uniform tax according to the physical quantities of pollution may not be the appropriate way to correct for an externality because
A) it places a unfair burden on small producers. B) a uniform tax can only account for social costs and not external costs. C) a firm will reduce production. D) it may not adequately account for economic damages.
According to the law of diminishing marginal returns, as more of a variable input is combined with fixed amounts of other resources:
a. the additions to output will eventually decrease. b. the additions to output cannot increase. c. total output will eventually decrease. d. the additions to output will eventually turn negative.
Refer to the accompanying figure.
Based on the figure, if the economy is in short-run equilibrium with output equal to 16,000, then there is ________, and ________ could return the economy to potential output (Y*).
A. an expansionary gap; a decrease in autonomous expenditures of 4,000 B. a recessionary gap; an increase in autonomous expenditures of 1,000 C. a recessionary gap; an increase in autonomous expenditures of 4,000 D. an expansionary gap; a decrease in autonomous expenditures of 1,000