The higher the rate of unemployment:
A. The larger is the GDP gap
B. The smaller is the GDP gap
C. The higher is the level of actual GDP
D. The lower is the level of potential GDP
A. The larger is the GDP gap
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A new firm successfully enters a three-firm Cournot oligopoly without changing the demand and cost structures. The new price becomes:
A. unknown for lack of other information. B. 50 percent of the original price. C. 75 percent of the original price. D. the same as the original price.
If two units of a good provide 8 utils and the marginal utility of the third unit of the good is 2 utils, what is the total utility from consuming three units of the good?
A. 6 utils B. 10 utils C. 8 utils D. 2 utils
Sam has $200 a month to spend on two normal goods-tanning sessions or rounds of golf. Tanning sessions are $20 each, and a round of golf is $40. Sam currently consumes six tanning sessions and two rounds of golf. If the price of a round of golf drops to $20, the income effect:
A. predicts Sam will double his consumption of golf. B. predicts Sam will consume more golf and less tanning sessions. C. predicts Sam will increase his consumption of both golf and tanning sessions. D. predicts Sam will consume less golf and more tanning sessions.
Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower