For an economy starting at full employment real GDP, a decrease in investment results in a(n)
A. decrease in full-employment output.
B. inflationary output gap.
C. recessionary output gap.
D. increase in full-employment output.
Answer: C
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Figure 4.5 illustrates a set of supply and demand curves for hamburgers. An increase in supply and a decrease in demand are represented by a movement from
A) point d to point a. B) point b to point d. C) point a to point c. D) point d to point b.
If fiscal stimulus creates a large budget ________, then in the long run economic growth ________
A) deficit; decreases B) surplus; increases C) deficit; increases D) surplus; decreases E) None of the above answers is correct. The figure above shows a nation's aggregate demand curve, aggregate supply curve, and potential GDP.
In Singapore the government places a $5,000 tax on the buyers of new automobiles. After the purchase of a new car, a buyer must pay the government $5,000. How would the imposition of the tax on buyers be illustrated in a graph?
A) The tax will shift both the demand and supply curves to the right by $5,000. B) The tax will shift the demand curve to the right by $5,000. C) The tax will shift the supply curve to the left by $5,000. D) The tax will shift the demand curve to the left by $5,000.
If product Y is an inferior good, an increase in consumer incomes will:
a. Not affect the sales of product Y b. Shift the demand curve for product Y to the left c. Result in a surplus of product Y d. Shift the demand curve for product Y to the right