Assume the economy is initially in equilibrium with real GDP equal to potential GDP. Other things equal, if the economy enters a recession, automatic stabilizers
A) reduce the magnitude of the multiplier and reduce the size of the decline in real GDP.
B) reduce the decline in investment expenditures and therefore increase the real short-term interest rate.
C) cause any decrease in real GDP to be offset by an equal decrease in the inflation rate.
D) raise the interest rate to prevent the output gap from falling below equilibrium.
A
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Jason needs help getting ready for the next test in his economics course and would like to hire Maria, an economics tutor, to help him
Jason is willing to pay $30 for the first hour of tutoring, $25 for the second, $20 for the third, $15 for the fourth, and $10 for the fifth. The equilibrium price for tutoring is $15 per hour. For how many hours of tutoring will Jason hire Maria? Why this amount of hours? What is Jason's consumer surplus, if any, from the tutoring? What is Maria's consumer surplus from the tutoring?
The above table shows production points on Sweet-Tooth Land's production possibilities frontier. What is the opportunity cost of one can of cola if Sweet-tooth Land moves from point C to point B?
A) 20 chocolate bars per can of cola B) 10 chocolate bars per can of cola C) 2 chocolate bars per can of cola D) 1/2 chocolate bars per can of cola
Aggregate demand increases when
A) foreign incomes fall. B) interest rates rise. C) the exchange rate rises. D) None of the above answers is correct.
In the above figure, the short-run equilibrium is at the price level of ________ and real GDP of ________
A) 100; $15.5 trillion B) 120; $16 trillion C) 110; $15.5 trillion D) 100; $16 trillion