Which of the following is a normative economic statement?
A) If the government increases spending, unemployment will fall.
B) The government should increase spending during times of economic recession.
C) If banks create more money, unemployment will decrease.
D) If the price of gasoline rises, car pooling will increase.
Answer: B
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A lumberjack loses his job because timber cutting restrictions were imposed by the EPA to protect the spotted owl habitat. This lumberjack would be
A) cyclically unemployed. B) frictionally unemployed. C) structurally unemployed. D) seasonally unemployed.
Productivity growth occurs when:
A) there are more inputs B) firms can produce more output per unit of input C) more output is produced D) employees work extra hours
Plastic and steel are substitutes in the production of body panels for certain automobiles. If the price of plastic increases, with other things remaining the same, we would expect:
A) the price of steel to fall. B) the demand curve for steel to shift to the right. C) the demand curve for plastic to shift to the left. D) nothing to happen to steel because it is only a substitute for plastic. E) the demand curve for steel to shift to the left.
If government spending increased by $100 billion and the MPS within the economy was 0.25, what would be the total impact on real GDP?
a. $25 billion increase b. $75 billion increase c. $133 billion increase d. $400 billion increase