Those who favor active policy making argue that all of the following exist EXCEPT
A) perfectly flexible wages and prices.
B) inflation and unemployment are stable in the short run and predictable in the long run.
C) pure competition is not typical.
D) aggregate demand shocks can influence real GDP and unemployment.
Answer: A) perfectly flexible wages and prices.
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An inflationary gap is occurs when
A) real GDP is less than potential GDP. B) real GDP exceeds potential GDP. C) real GDP equals potential GDP. D) the economy is at full employment.
Inheritance accounts for about
A) 5 percent of income inequality. B) 10 percent of income inequality. C) 15 percent of income inequality. D) 30 percent of income inequality.
In an economy without international trade, we can expect total output to equal
a. consumption spending plus investment spending plus government purchases b. consumption spending minus leakages c. the sum of leakages and injections d. consumption spending plus investment spending e. total spending minus leakages and injections
NPR ("Certain Green Industries Have Job Openings", November 12, 2008 ) reported on a story about wind turbine manufacturers in Ohio having trouble finding skilled workers
The report noted that as a result tens of thousands of people having been laid off, there is "a huge pool of job-seekers." The firms claim to "offer good pay and benefits." A representative from the United Steelworkers claims that their union members have easily transferrable skills, but the pay is too low, around $30,000 annually. A manager at Apollo Alliance says that workers in the new industry need different skills than those in the old steel industry. The type of unemployment described in the story is ________ unemployment.
A) cyclical
B) structural
C) frictional
D) efficiency wage