Which of the following is likely to be true when the economy is in a boom?
A) The inflation rate is negative.
B) The size of government expenditure multiplier is small.
C) The size of government expenditure multiplier is large.
D) The unemployment rate is high.
B
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Refer to the figure above. If there is wage rigidity in the market, how much unemployment is created when the labor demand curve shifts to LD2?
A) 20 units of labor B) 30 units of labor C) 10 units of labor D) 40 units of labor
Jamal, Lawson, and Kyle have been standing in line for almost an hour waiting to be served at Kirala, a popular new Japanese restaurant. It is possible that some of the people in line won't be served at all before the restaurant closes
Which of the following could explain why the restaurant does not simply raise prices high enough to eliminate the lines? a. In situations where consumption takes place publicly, demand for the product is also influenced by how many other people are buying the product. Consequently, a popular restaurant that increased its prices enough to eliminate lines might find that it had also eliminated its popularity. b. Firms may sometimes not raise their prices for fear that it violates people's sense of fairness and might alienate customers. c. The demand for restaurant meals is relatively elastic and if the firm raises prices it will lower its profits. A) a only B) a and b only C) a and c only D) a, b, and c
A change in business taxes and regulation can affect input prices and aggregate supply.
Answer the following statement true (T) or false (F)
Use the classical (RBC) IS-LM-FE model to show the effects on the economy of a temporary adverse supply shock; for example, an increase in the price of oil. You should show the impact on the real wage, employment, output, the real interest rate, consumption, investment, and the price level.
What will be an ideal response?