The equilibrium level of real GDP is $5,000 billion, the full employment level of real GDP is $6,000 . and the marginal propensity to consume (MPC) is 0.90 . Which of the following statements is true?
a. A recessionary gap exists equal to $100 billion.
b. The full employment target could be reached if government increased its spending by $100 billion.
c. Both of the above statements are true.
d. Neither of the above statements are true.
c
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The learning curve indicates that
A) economies of scale are taking effect. B) repetition of various production tasks cause unit costs to decrease. C) workers must learn new skills in order to improve. D) it takes time to learn a new skill.
If purchasing-power parity holds, then the value of the
a. nominal exchange rate is equal to one. A dollar buys as many goods in the U.S. as it does overseas. b. nominal exchange rate is equal to one. A dollar buys the quantity of foreign currency equal to the U.S. price level divided by the foreign country's price level. c. real exchange rate is equal to one. A dollar buys as many goods in the U.S. as it does overseas. d. real exchange rate is equal to one. A dollar buys the quantity of foreign currency equal to the U.S. price level divided by the foreign country's price level.
Tennessee emits sulfur dioxide that flows into North Carolina. In meeting sulfur emissions regulations, the Tennessee Valley Authority (TVA), which produces electricity, buys sulfur emission permits from Wyoming. The resulting hot spot problem is:
A. The citizens of Wyoming will experience higher sulfur emissions as a result of the emissions trading program. B. The citizens of Wyoming will experience lower sulfur emissions as a result of the emissions trading program. C. The citizens of Tennessee will pay more to reduce sulfur emissions than if the government used a command-and-control approach. D. The citizens of North Carolina will suffer higher emissions as a result of the emissions trading program.
The following are all determinants of income differences examined in the text EXCEPT
A) age. B) marginal productivity. C) inheritance. D) height.