The major sources of economic growth are
a. gains from trade, entrepreneurial discovery, and investment.
b. high taxes, an expansion in the size of government, and restrictions on investments by foreigners.
c. rapid expansion in the supply of money, trade restrictions, and government licensing of business activities.
d. free and open elections and politicians who are willing to place the general welfare of the populace above their political ambitions.
A
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
When a domestic currency is completely backed by a foreign currency and the note-issuing authority establishes a fixed exchange rate to this foreign currency, then the country is said to have
A) created a currency board. B) undergone dollarization. C) adopted a managed exchange system. D) adopted an exchange rate monetary system.
If there is an improvement in technology that affects only Aggregate Supply and a nation's wealth falls due to a sagging stock market, then:
a. Price index rises, and real GDP falls. b. Price index rises, and the change in real GDP is uncertain. c. Price index falls, and real GDP rises. d. Price index falls, and the change in real GDP is uncertain. e. Price index falls, and real GDP falls.
Figure 3-20
Refer to . If the price decreases from $22 to $16, consumer surplus increases by
a.
$120.
b.
$360.
c.
$480.
d.
$600.