The aggregate expenditure model predicts a business cycle expansion occurs when
A) the aggregate planned expenditure curve shifts downward.
B) aggregate supply increases.
C) induced expenditure decreases.
D) autonomous expenditure increases.
E) potential GDP increases.
D
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An export subsidy is
A) a payment to a firm or individual that ships a good abroad. B) a fee that is charged to a country that ships goods to the U.S. C) a payment made to a foreign government in return for preferential trade treatment. D) illegal in the U.S. but is fairly common in the rest of the world. E) a limit on the quantity of a good or service that can be sold abroad.
Higher consumer prices caused by external forces would boost the wage costs of firms without any commensurate increase in the nominal demand for their products if
A) long-term contracts were in force. B) all labor contracts were one year in duration. C) there were no COLAs. D) there were full COLA protection.
If a price ceiling is set above the current market clearing price, then
A) a surplus must immediately occur. B) a shortage must immediately occur. C) there will be incentives for black markets to develop. D) quantity demanded will remain equal to quantity supplied at the current market clearing price.
A macroeconomist compares the unemployment and job vacancy statistics for the previous year and notes that both unemployment and job vacancies have risen to high levels. What conclusion should she draw?
a. The problem will likely resolve itself as the unemployed workers fill the job vacancies. b. Businesses are likely having trouble finding workers with the right skill sets. c. The economy is growing at such an astounding rate, frictional unemployment is likely out of control. d. The economy is likely entering a recession as businesses are refusing to hire workers.