Demonstrate how a permanent fiscal expansion will not increase output in the long run
What will be an ideal response?
(1 ) E on Y-axis, Y on X-axis
(2 ) DD shifts right
(3 ) temporary equilibrium where E lower and Y increased
(4 ) permanent increase in demand caused by increase in G causes currency to appreciate: AA shifts left
(5 ) therefore Y returns to original levels, E decreases even more
RESULT of permanent fiscal expansion: currency appreciation, output does not change. This effect is called "crowding out."
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When national output rises, the economy is said to be in
A) an expansion. B) a deflation. C) an inflation. D) a recession.
Which of the following is correct?
a. Typically more than one-third of the unemployed are new entrants into the job market. b. Most spells of unemployment are short. c. Most unemployment observed at any time is long term. d. All of the above are correct.
The money-creation process generated by an injection of reserves stops when
A. people deposit their loans into other banks. B. reserve requirements are raised. C. the increase in required reserves equals the size of the injection. D. bankers begin to fear runs and stop making loans.
Refer to the information provided in Table 8.4 below to answer the question(s) that follow. Table 8.4ProduceUsing TechniquesUnits of Variable KInputs L1 unit of outputA4 4?B2 6????2 units of outputA 7 6?B410????3 units of outputA 8 6?B 6 11Refer to Table 8.4. Assume that the relevant time period is the short run. Assuming the price of labor (L) is $5 per unit and the price of capital (K) is $10 per unit, the average total cost of producing two units of output is
A. $10. B. $20. C. $45. D. $50.