Answer the following questions true (T) or false (F)
1. The dynamic aggregate demand and aggregate supply model assumes that potential GDP increases over time.
2. Inflation is generally the result of total spending growing faster than total production.
3. One factor which brought on the recession of 2007-2009 was the end of the housing bubble.
1. TRUE
2. TRUE
3. TRUE
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Briefly explain the major argument of the factor endowment trade theory
What will be an ideal response?
Financial intermediaries
a. harm both borrowers and lenders because they pay lenders a lower rate of interest than they charge to borrowers b. specialize in assembling loanable funds from households and firms, and channeling those funds to other households, firms, and government agencies c. are all depository institutions d. increase the risk of lending and borrowing because a financial intermediary has nothing to lose from such transactions e. reduce efficiency because they add an extra step to many financial transactions
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
Refer to the data. The national income is:
Answer the question on the basis of the following data. All figures are in billions of dollars.
A. $265.
B. $223.
C. $208.
D. $346.