Explain the sequence of events that occurs in the economy once total production (TP) is less than total expenditure (TE)
If TP is less than TE, it indicates that businesses have produced too little relative to what the three sectors of the economy want to buy. The difference between TP and TE would result in an unexpected fall in inventories. Falling inventories send a signal to firms that they have underproduced, so they will increase the quantity of goods they produce. The rise in production causes Real GDP to increase and the levels of TP and TE will move closer together. This cycle will continue until TE and TP are equal.
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Worker mobility and transition aid to workers are two ways to offset some of the impacts of:
A. increasing wage inequality. B. increases in the labor supply. C. the slowdown in productivity growth. D. the slowdown in real-wage growth.
Partial equilibrium analysis is the process of examining the equilibrium conditions for households and firms combined for more than one but not all individual markets.
Answer the following statement true (T) or false (F)
Research shows that prices tend to remain sticky for a longer period of time
A) in the manufacturing sector than in the service sector. B) in the service sector than in the manufacturing sector. C) in Western Europe than in the United States. D) in the United States than in Western Europe.
The multiplier effect refers to the series of
A) autonomous increases in consumption spending that result from an initial increase in induced expenditures. B) induced increases in consumption spending that result from an initial increase in autonomous expenditures. C) autonomous increases in investment spending that result from an initial increase in induced expenditures. D) induced increases in investment spending that result from an initial increase in autonomous expenditures.