Explain how the recession of 2007–2009 in the United States provides an example of a recessionary expenditure gap.
What will be an ideal response?
The recession of 2007–2009 in the United States is an example of a recessionary expenditure gap. In 2007 and 2008, after-tax consumption and investment expenditures decreased with the onset of the recession. These changes shifted the aggregate expenditures downward creating a recessionary expenditure gap at the full-employment level of real GDP. Aggregate expenditures were insufficient to maintain full-employment GDP. Real GDP declined and unemployment rose.
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A firm dumps dioxin in a river, thereby severely polluting the river. The cost of the water pollution is i. zero for the firm. ii. an external cost. iii. part of the marginal social cost
A) i only B) ii only C) iii only D) ii and iii E) i, ii, and iii
In Singapore the government places a $5,000 tax on the buyers of new automobiles. After the purchase of a new car, a buyer must pay the government $5,000. How would the imposition of the tax on buyers be illustrated in a graph?
A) The tax will shift the demand curve to the left by $5,000. B) The tax will shift the supply curve to the left by $5,000. C) The tax will shift both the demand and supply curves to the right by $5,000. D) The tax will shift the demand curve to the right by $5,000.
The long-run labor demand curve is relatively flatter than the short-run labor demand curve because, in the short run,
A) the wage rate is fixed. B) the firm cannot vary the amount of capital used. C) the firm is a price taker. D) All of the above.
Economists would argue that the gender wage gap is narrowing because of efficiency wages
a. True b. False Indicate whether the statement is true or false