In the classical model, if government tries to increase employment and output by increasing its own purchases,
a. it will achieve its goal and economic conditions will improve
b. it will not attain its objective unless it also decreases taxes
c. its actions will cause the interest rate to rise, which will choke off investment spending
d. firms will be motivated to increase their output, thereby creating even more jobs
e. saving will also increase, as more people are employed
C
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The productivity curve shifts upward when
A) technology advances. B) physical capital increases. C) hours of labor increase. D) hours of labor decrease. E) human capital decreases.
An aggregate production function shows the relationship between
A) real GDP and leisure. B) real GDP and the quantity of labor employed. C) leisure and unemployment. D) real GDP and unemployment.
Which of the following is a normative statement?
a. A decrease in price leads to an increase in quantity consumed. b. Incomes grow more rapidly in high-tax states than low-tax states. c. People would be better off if government expenditures were higher. d. People will buy less butter at $1.50 per pound than they will at $1 per pound.
A network externality is:
A. a direct effect on an economic decision maker. B. an uncompensated effect on someone other than the person who caused it. C. an indirect effect on an economic decision maker. D. the effect that an additional user of a good or participant in an activity has on the value of that good or activity for others.