Figure 10-4
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In Figure 10-4, if full employment occurs at an output level of 4,000 and the economy is currently at an output level of 5,000, then we can expect a(n)
A. increase in autonomous consumer spending that shifts the aggregate demand curve to the left.
B. increase in wages that will shift the aggregate supply curve to the left.
C. decrease in investment spending that shifts the aggregate demand curve to the left.
D. decrease in wages that will shift the aggregate supply curve to the left.
Answer: B
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
Which statement is true?
A. Subsidy payments to farmers were almost completely phased out in 2007. B. The so-called new economy of the 1990s was neither new, nor very different from the economy of the previous 25 years. C. Until the time of the Great Depression, the United States was primarily an agricultural nation. D. There were no recessions during the presidency of Bill Clinton (January 1993-January 2000).
The table above shows the production possibilities for an economy. When the economy produces a combination of 900 books and 50 loaves of bread,
A) production efficiency occurs because resources are not overused. B) allocative efficiency is achieved because both goods are produced. C) production efficiency is not achieved. D) allocative and production efficiency are both achieved. E) production efficiency is not achieved but allocative efficiency might be achieved.
The idea that tariffs should be imposed to protect new and developing industries is referred to as
A) the start-up argument. B) the infant industry argument. C) the incubator business theory. D) the new markets theory.