Refer to Figure 12.1. An increase in government spending financed with external debt would move the economy's potential consumption from point
A. C to point A.
B. C to point E.
C. A to point I.
D. B to point A.
Answer: C
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In a country with a working-age population of 100 million, 70 million workers are employed and 5 million workers are unemployed. What is the labor force participation rate?
A) 70 percent B) 5 percent C) 75 percent D) 7 percent
In a political election, a candidate whose positions are on the left will tend to be labeled __________ by his or her opponent
A) too far to the left B) too far to the right C) too much of a middle-of-the-roader D) an unknown quantity
The government might increase its spending to end a recession because:
A. allowing the short-run aggregate supply to adjust since back to the long-run can take a long time. B. the economy enjoys a higher level of output in the long run. C. the economy experiences lower prices at the long-run equilibrium. D. None of these justify why the government might change its spending to end a recession.
Falling output, in the short run, could be due to:
A. an increase in short-run aggregate supply. B. a reduction in aggregate demand. C. an increase in long-run aggregate supply. D. an increase in aggregate demand.