If short-run equilibrium output equals 10,000, the income-expenditure multiplier equals 10, and potential output (Y*) equals 9,000, then government purchases must ________ to eliminate any output gap.
A. decrease by 100
B. decrease by 1,000
C. increase by 1,000
D. increase by 100
Answer: A
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A) are issued by banks, not the Federal Reserve. B) are not the means of payment. C) typically require an identification requirement, such as your driver's license. D) are not backed by all commercial banks.
If the coupon payment on a bond is $500 and the coupon rate is 5%, then what is the face value of the bond?
A. $10,667 B. $10,000 C. $1,000 D. $678.40 E. There is not enough information provided to answer this question.
If producers cannot afford the fees for pollution rights,
a. they will pollute b. they will buy pollution rights c. they will sell pollution rights d. they will have to find a cheaper way to deal with their pollution e. they will not be able to use their pollution rights
When the unemployment rate is less than the natural unemployment rate, real GDP is ________ than potential GDP and the output gap is ________.
A) smaller; negative B) smaller; positive C) greater; positive D) greater; equal to zero E) greater; negative