Suppose the price level is fixed, the MPC is .5, and the GDP gap is a negative $80 billion. To achieve full-employment output (exactly), government should:
A. increase government expenditures by $80 billion.
B. reduce government expenditures by $40 billion.
C. reduce taxes by $40 billion.
D. reduce taxes by $80 billion.
D. reduce taxes by $80 billion.
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Caroline has saved $100,000 for her retirement. She earned 4 percent interest on that money during the year 2013. If the inflation rate was 1 percent in 2013, what was Caroline's real interest rate?
A) $4,000 B) 5 percent C) 1 percent D) 4 percent E) 3 percent
In Figure 11.1, assume that QF is full-employment output and the level of aggregate spending is represented by AD1. If AD1 increases to AD2, which of the following statements is correct?
A. Excess AD and inflation will be the result. B. Full employment will not be reached because some of the additional spending results in higher prices rather than higher output. C. A lower price level will result. D. Full employment will be reached.
Show, using a demand and supply diagram, what will happen to the wages of scientists and engineers if there is an increase in immigration of scientists and engineers from other countries.
What will be an ideal response?
Consider the choices below. All of these except one truly represent the record of productivity growth in the United States from 1800 to the present. Find the one that does not belong.
A. Growth of per capital real GDP slowed down considerably between 1973 and 1994 B. The best period for GDP growth was the production boom between 1995 and 2005 C. There was a rapid rise in the growth rate of per capita GDP between 1950 and 1972 D. GDP per capita fell rapidly between 1900 and 1950