Assume that the government decides to use fiscal or monetary policy to stimulate the economy and that this action comes as a surprise to most individuals and businesses. In the short run, the result will be
A. an increase in aggregate demand and a fall in the price level.
B. a decrease in aggregated demand and a rise in the price level.
C. a decrease in the average duration of unemployment and a decrease in the unemployment rate.
D. an increase in the average duration of unemployment and an increase in the unemployment rate.
Answer: C
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Suppose that real GDP starts at 100 and grows at a rate of 10 percent per year for two years. In the third year real GDP would be
A) 110. B) 110.1. C) 120. D) 121.
Which of the following is likely to cause a right shift in the supply curve for labor?
A) An increase in the population B) A decrease in the population C) An increase in the price of the final good that the workers produce D) A decrease in the price of the final good that the labor is used to produce
Which contracting party gains from the use of a more sophisticated contract?
a. The principal, who offers the contract. b. The agent, who accepts the contract. c. Both parties may lose. d. Both parties gain equally.
Under the expenditure approach to GDP accounting, government purchases of goods and services include welfare payments
a. True b. False Indicate whether the statement is true or false