During recessions, GDP falls and unemployment increases. Why might the actual output produced not fall as much as officially measured GDP during recessions?
a. There is an increase in involuntary part-time employment during recessions, the output from which is not accounted for in GDP
b. Workers who became unemployed during the recession may produce goods in the underground economy
c. Unemployment benefits to laid off workers are included in GDP
d. Laid off workers may start their own businesses, but profit income from self-employment is not accounted for in GDP
e. Unemployed workers have more leisure time to enjoy.
B
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The aggregate demand for good X is Q = 20 - P. If the price rises from P = $4 to P = $5, what is the change in consumer surplus?
A) $4.50 B) $5.50 C) $15.50 D) $16
According to the theory of rational expectations, the economy always remains at the natural rate of unemployment, irrespective of policy changes
a. True b. False Indicate whether the statement is true or false
The marginal propensity to consume is equal to the slope of the consumption function
Indicate whether the statement is true or false
During the stock market crash of October 1987, the Fed
a. raised the discount rate. b. raised reserve requirements. c. increased lending to member banks. d. sold government securities.