Assume that potential GDP is $200 billion and the multiplier equals 5 . The recessionary gap is $10 billion. What is the actual level of equilibrium income?
a. $200 billion
b. $150 billion
c. $100 billion
d. $80 billion
e. $50 billion
b
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A minimum wage set above the equilibrium wage will
A) create a shortage of labor. B) create a surplus of labor. C) have no effect because the equilibrium level of employment is not affected by a minimum wage above the equilibrium wage. D) create a lower wage rate for skilled workers than for unskilled workers.
The Jones family is going to Disney World and has set a budget of $2000 for food and souvenirs. If Mr. Jones finds a $50 bill on the ground during their trip and uses it to purchase additional souvenirs, then
a. souvenirs are a normal good b. food is an inferior good c. the budget line has shifted to the left d. the slope of the budget line has changed e. souvenirs are a luxury good
The consumption function will shift for all of the following reasons except
a. a change in a household's real assets b. a change in interest rates c. a change in expectations of price changes d. a change in a household's incomes e. a change in taxation policy
If a natural disaster were to cause a negative long-run supply shock to the economy, once the economy adjusts, the new equilibrium will be at a:
A. higher price level and lower level of output. B. lower price level and lower level of output. C. higher price level and higher level of output. D. lower price level and higher level of output.