Refer to Figure 27-5. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, and no fiscal or monetary policy is pursued, then at point B
A) the economy is above full employment.
B) firms are operating below capacity.
C) there is pressure on wages and prices to rise.
D) income and profits are rising.
E) the unemployment rate is very low.
B
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Explain how our economic welfare depends upon our level of real GDP per person but there might not be a one-to-one relationship between economic welfare and real GDP per person. Give examples of things that can effect one but not the other
What will be an ideal response?
What is the difference between goods and services?
What will be an ideal response?
Businesses in the United States cut their investment projects by $30 billion. If the MPC is 2, what will be the impact on the national income (Y)?
a. Y will fall by $15 billion. b. Y will fall by $30 billion. c. Y will fall by $60 billion. d. Y will fall by $120 billion.
alternating periods of economic growth and contraction
What will be an ideal response?