Assume that the full-employment level of output is $500, and the price level associated with full-employment output is 100. Also assume that the economy's current level of output is $450 and, at the price level of 100, current aggregate demand is $400. If the government wants to move the economy back to the full-employment level of output and the MPC is 0.75, then it should
A. reduce government purchases by $25.
B. increase government purchases by $25.
C. increase government purchases by $100.
D. reduce government purchases by $100.
Answer: B
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Doctors and lawyers in every state need a license to practice. This is an example of
A) ownership of a key input. B) consumer protection laws. C) consumer advocacy. D) occupational licensing.
Specialization leads to
a. increases in production because labor uses more advanced technology b. decreases in production because each resource becomes less productive c. increases in production because more resources are being used d. increases in production because each resource becomes more productive e. increases in production because capital is more productive than labor
Data suggest that which of the following are necessary for high rates of economic growth?
A) private property rights. B) free markets. C) clear incentives. D) all of these choices.
Which of the following statements about movement along the production possibilities
curve in the figure above is FALSE? A) An additional computer can be produced only if fewer televisions are produced. B) The trade—off between computers and televisions is not constant. C) Society cannot have more of both goods at the same time. D) There are no opportunity costs involved in choosing one point on the curve over all other points.