Potential GDP
a. is always less than actual GDP.
b. is identical to actual GDP.
c. measures inflation.
d. is the output an economy could produce at full employment.
D
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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
The rate of interest banks charge other banks for overnight loans of reserves is the
A) discount rate. B) prime rate. C) federal funds rate. D) real rate.
Refer to Table 5.4. If at Job B the $20 outcome occurs with probability .2, and the $50 outcome occurs with probability .8, then in absolute value
A) Y = Z = $6. B) Y = Z = $24. C) Y = Z = $35. D) Y = $24; Z = $6. E) Y = $6; Z = $24.
Which of the following is not a form of crowding out?
a. Lower household spending due to higher interest rates b. Lower business spending due to higher interest rates c. Lower net exports due to higher interest rates d. Lower private spending due to higher taxes e. Greater output and employment in the short run