Which of the following statements supports the passive approach to close a recessionary gap?
a. It is likely that policies will be subject to time lags.
b. Prolonged unemployment may cause the economy's potential real GDP to fall.
c. Workers' skills may grow rusty during a prolonged recession
d. It is likely that unemployed workers will drop out of the labor force.
e. Firms may neglect their capital stock during a prolonged recession.
a
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The law of diminishing returns states that as a firm increases
A) all the inputs is uses, the marginal product of each of these inputs always decreases. B) a variable input, with a given quantity of fixed inputs, the firm's marginal cost eventually decreases. C) a variable input, with a given quantity of fixed inputs, the marginal product of the variable input eventually decreases. D) a variable input, given the quantity of fixed inputs, the firm's average total cost will eventually decrease.
Dividing the number of households making over $80,000 by the number of households making less than $20,000 will produce the 80/20 ratio.
Answer the following statement true (T) or false (F)
If the Federal Reserve Banks goal was to use open market operations to contract the economy it could move from:
A. MS1 to MS3
B. MS3 to MS4
C. MS4 to MS3
D. MS2 to MS3
Monetary policy designed to counteract a reduction in aggregate demand might include
A. a sharp increase in short-term interest rates. B. an increase in the money stock. C. an increase in individual income tax rates. D. increased government-infrastructure spending.