If the GDP gap is $400 billion and AS is upward-sloping, an effective fiscal policy would be to increase aggregate demand by $400 billion.
Answer the following statement true (T) or false (F)
False
With an upward-sloping aggregate supply curve, if aggregate demand increased by the amount of the recessionary GDP gap, the economy would fall short of full employment. Some of the increased demand pushes up prices instead of output. To reach full-employment equilibrium, the AD curve must shift by an amount greater than the GDP gap, the amount of the entire AD shortfall.
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Suppose the current level of output is 5000 and the elasticity of output with respect to labor is 0.7. A 10% increase in labor would increase the current level of output to
A) 5035. B) 5070. C) 5350. D) 5700.
Individual members of a cartel have an incentive to ____ the cartel agreement because pursuit of ____ will maximize individual profit
a. adhere to; self-interest b. cheat on; collective interest c. cheat on; self-interest d. adhere to; collective interest
A firm that wants to achieve economies of scale could do so by
a. assigning limited tasks to its employees, so they can master those tasks. b. employing a smaller number of workers. c. producing a smaller quantity of output. d. producing an output level higher than the efficient scale.
Explain the role of job experience in explaining the differences between the average wages of men and women