Assuming an upward-sloping AS curve, if an economy is at full employment and consumption spending decreases while all other levels of spending remaining constant, then
A. Changes in consumption spending have no impact on GDP.
B. Inventory levels are less than desired until a new equilibrium is reached.
C. Increased unemployment results.
D. Any GDP gap disappears.
Answer: C
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Demand is elastic if
A) consumers respond strongly to changes in the product's price. B) a large percentage change in price brings about a small percentage change in quantity demanded. C) a small percentage change in price brings about a small percentage change in quantity demanded. D) the quantity demanded is not responsive to price changes. E) the demand curve is vertical.
The more elastic the demand curve, _____
a. the smaller the proportion of a tax paid by the suppliers b. the smaller the proportion of a tax paid by the demanders c. the more elastic the supply curve d. the more the tax can be shifted to demanders
If the production of a sofa requires the purchase of 3 types of inputs and the production of a harp requires the purchase of 30 types of inputs,
a. the harp-producing firm will buy the sofa-producing firm b. the sofa-producing firm will buy the harp-producing firm c. harp production is more likely to be done by firms than sofa production is d. sofa production is more likely to be done by firms than harp production is e. both harp and sofa production will always be done by firms because there is more than one input involved in each
Which of the following is most likely to benefit from government established price floors in agriculture?
A. low income farmers B. small farmers C. large farm owners and corporate farms D. cattle ranchers