"Last month unemployment fell to 4 percent, its lowest level in years. The economy is growing rapidly, but consumer prices have risen at an annual rate of 10 percent during the last six months." Which of the following policies would be most appropriate under these circumstances?
A. both an increase in government spending and a decrease in taxes
B. an increase in taxes
C. a reduction in taxes
D. an increase in government spending
Answer: B
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Long-run equilibrium will occur at the price level at which
A) the aggregate demand and long-run aggregate supply curves intersect. B) the short-run aggregate supply and long-run aggregate supply curves intersect. C) the long-run aggregate demand and short-run aggregate supply curves intersect. D) the aggregate demand and short-run aggregate supply curves intersect.
Variations in a time-series forecast can be caused by:
a. cyclical variations b. secular trends c. seasonal effects d. a and b only e. a, b, and c
The shortfall between actual real GDP and potential GDP
A. decreases as the unemployment rate rises. B. increases as the unemployment rate rises. C. increases as the employment rate rises. D. decreases as the labor force increases.
The curve in the above figure will shift to the right when
A. the proportion of the population that is elderly increases. B. population falls. C. labor productivity increases. D. the price level falls.