Use a graph to illustrate the long run adjustment to the scenario you depicted in (d). Explain what will happen over time.
Ans: Over time wages and prices will be bid up since the economy is operating at a production level greater than Yfe. As nominal wages increase, this will cause the SRAS curve to shift to the left from SRAS1 to SRAS2. Eventually the economy will return to Yfe but with a higher aggregate price level than the initial level. Unemployment will return to the full employment or natural rate of unemployment.
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In the figure above, how can the economy represented by the production possibilities frontier move from point C to point F?
A) Increase the available amount of resources. B) Increase the level of technology. C) Redistribute the existing resources to produce more apples and fewer oranges. D) First move to point B and then move to point F.
Answer the question based on the following information on the banking system. Deposits at the central bank = 200 U.S. Government Securities = 600 Checking Deposit = 1,700 Loans = 800 Stockholder's Equity = 70 Other Assets = 450 Other Liabilities = 230 Borrowing from the central bank = 100 Cash in the Vault = 50 The reserve ratio on checking accounts = 10% The monetary base:
a. cannot be determined from this information b. equals $250 c. equals $134 d. equals $2,100 e. none of the above
Which of the following countries has the highest Gini ratio, as of 2011?
A. Italy. B. United States. C. South Africa. D. Mexico.
The gap between consumption and income can never be particularly large
Indicate whether the statement is true or false