What is the opportunity cost of moving from point D to point C?
Hypothetical Production Schedule for Two-Product Economy
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Compared to consumption spending, investment historically has tended to be
A) stagnant. B) more variable. C) more stable. D) greater.
We measure gross domestic product by multiplying the quantities of goods by their prices because it allows us to
A) calculate the total number of units of goods produced in an economy. B) correct for inflation. C) directly compare the output of one economy to that of another. D) express the values of products in a common unit of measurement.
What are efficiency wages and why are they important in internal labor markets?
What will be an ideal response?
Refer to the diagram, in which Q f is the full-employment output. If aggregate demand curve AD 2 describes the current situation, appropriate fiscal policy would be to:
A. do nothing since the economy appears to be achieving full-employment real output.
B. increase taxes and reduce government spending to shift the aggregate demand curve
rightward from AD 2 to AD 3 .
C. increase taxes on businesses to shift the aggregate supply curve rightward to reduce the
price level.
D. reduce taxes and increase government spending to shift the aggregate demand curve from
AD 2 to AD 1