Which of the following is NOT a reason why real GDP can be expanded beyond a level consistent with its long-run growth path in modern Keynesian analysis?
A. The existing capital stock can be used more intensively.
B. In the short run, existing workers can work more hours.
C. Higher prices induce firms to hire more workers.
D. Prices and wages are flexible, allowing for needed adjustments.
Answer: D
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Profits account for about 30 cents out of each dollar spent on goods in the United States
a. True b. False Indicate whether the statement is true or false
Public choice theory indicates that tariffs, quotas, and other trade restrictions are primarily the result of the
a. political clout of foreigners. b. political clout of domestic consumers. c. political power of the special interest groups. d. attractiveness of sound economic policies to elected political officials.
Suppose that a foreign monopolist supplies the entire domestic market (there is no domestic production). The home country then applies a 5% tariff on imports from the foreign monopolist. How will the tariff affect the price in the home market?
a. It will increase by more than 5%. b. It will increase by 5%. c. It will increase by less than 5%. d. It will not change.
Which of the following is likely to happen if investors in an economy become optimistic following the discovery of huge mineral reserves?
A) Unemployment will increase. B) Consumption will increase. C) Real wages will fall. D) Prices will fall.