Which of the following statements best describes the neoclassical perspective?
a. The level of potential GDP is determined by long-term productivity growth, and the economy typically will return to full employment after a change in aggregate demand.
b. The level of potential GDP is determined by short-term productivity growth, and the economy typically will return to full employment after a change in aggregate demand.
c. The level of potential GDP is determined by full employment ,and the long-term productivity growth will return after a change in aggregate demand.
d. The level of potential GDP is determined by full employment, and short-term productivity growth will return after a change in aggregate demand.
a. The level of potential GDP is determined by long-term productivity growth, and the economy typically will return to full employment after a change in aggregate demand.
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If we wanted to prove that macaroni is an inferior good, we would test the __________ of macaroni and get a __________
a. cross-price elasticity; negative number b. income elasticity; number less than 1 c. income elasticity; positive number d. price elasticity of demand; number greater than negative 1 e. income elasticity; negative number
If an economy is operating at a point inside the production possibilities curve,
a. its resources are not being used efficiently. b. the curve will begin to shift inward. c. the curve will begin to shift outward. d. This is a trick question because an economy cannot produce at a point inside the curve.
An Added Perspective in the text shows that the average size of Japanese rice farms is growing and productivity is improving. This will likely cause __________ and generate requests for ____________
a. prices to increase; price ceilings b. prices to increase; price floors c. supplies to increase; price ceilings d. prices to decrease; price ceilings e. prices to decrease; price floors
Deficit financing tends to change the mix of output in the direction of more
A. Business sector goods. B. Public sector goods. C. International sector goods. D. Private sector goods.