If the aggregate supply curve has its normal shape, deficit spending will increase
a. both GDP and the price level at about the same rate.
b. the price level before it increases real GDP.
c. the price level but decrease real GDP.
d. real GDP before it increases the price level.
d
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Two of the most important factors that influence total factor productivity are
A) the stock of knowledge that the world possesses and the associated level of technology. B) the quantity and quality of labor available in an economy. C) capital accumulation and the total level of investment in an economy. D) population growth rates and the geographic location of the population.
Most economists agree that the economy will adjust to a recessionary gap, but the adjustment process
a. is rapid and destabilizing. b. is moderately quick, but not as rapid as necessary. c. takes place solely on the supply side. d. is very slow.
Which of the following statements is false? An economic analysis of carbon taxes can:
A. predict the effect on unemployment in West Virginia coal mining communities. B. conclude that such taxes should be imposed to benefit future generations. C. present a trade-off of the costs and benefits of different levels of carbon taxes. D. calculate the increase in costs faced by coal-using industries. compare the likely reductions in medical expenditures on diseases caused by smog.
If the price level falls, the real value of a dollar
a. rises, so people will want to buy more. b. rises, so people will want to buy less. c. falls, so people will want to buy more. d. falls, so people will want to buy less.