Assume that full-employment real GDP is Y = $1,200 billion, the current equilibrium real GDP is Y = $1,600 billion, and the MPC = 0.8 . In order to bring the economy to a full-employment real GDP,
a. a recessionary gap must be bridged by increasing aggregate expenditures by $80 billion.
b. an inflationary gap must be bridged by cutting aggregate expenditures by $80 billion.
c. nothing is needed to bring the economy into full employment equilibrium.
d. a recessionary gap must be bridged by increasing aggregate expenditures by $400 billion.
e. an inflationary gap must be bridged by cutting aggregate expenditures by $400 billion.
b
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An author who writes newspaper columns for $75 each is deciding whether to purchase a personal computer with a laser printer. She figures she'd be able to write two more columns per month than she could on her typewriter. She should
a. buy the computer if the monthly payment is less than $300 b. buy the computer regardless of its price c. not buy the computer if the monthly payment is greater than $75 d. not buy the computer regardless of the price e. buy the computer if the monthly payment is less than $150
Aggregate demand–aggregate supply analysis shows that in the long run the effect of increased aggregate spending on real GDP is:
a. negative. b. close to infinity. c. indeterminate. d. zero. e. positive.
Because banks make loans based on expectations concerning future economic activity, they
a. tend to make more loans during recessions and fewer loans during periods of prosperity, which helps the economy b. tend to make more loans during periods of prosperity and fewer loans during recessions, which doesn't help the economy c. make the same level of loans whether there is prosperity or recession but the profit they earn, which is based on the interest rate, varies d. expand the money supply faster in recessions than during periods of prosperity e. keep more excess reserves during periods of prosperity than during recessions
Workers at a car-manufacturing plant in Flint, Michigan are laid off because the economy is weak and GM cars aren't selling well. GM isn't sure when the plant will reopen. What type of unemployment best describes the workers' situation?
A. Frictional unemployment B. Full unemployment C. Cyclical unemployment D. Structural unemployment