If the expenditures multiplier in an economy is 3 and the government wants to increase aggregate demand by $12 billion at all price levels, it should cut taxes by
A. $9 billion.
B. $12 billion.
C. $6 billion.
D. $3 billion.
Answer: C
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As firms reduce their stock of capital, labor demand ________ and labor supply ________
A) decreases; stays the same B) decreases; decreases C) increases; stays the same D) increases; increases
The type of unemployment that arises from a decrease in real GDP is called
A) frictional unemployment. B) structural unemployment. C) downturn unemployment. D) non-expansion unemployment. E) cyclical unemployment.
The value of human capital can decrease when:
A. someone forgets how to do something that was valuable in his work. B. the skills someone possesses are no longer needed. C. machines can be taught to do what people used to have to do. D. All of these are examples of a decrease in human capital.
The natural rate of unemployment is the amount of unemployment
A. that exists when the economy goes into recession. B. equal to cyclical unemployment. C. that exists when the economy is in an expansion. D. equal to frictional plus structural unemployment.