Explain how fiscal policy can correct a contractionary ga
What will be an ideal response?
A contractionary gap can be closed by an increase in aggregate demand. By increasing government spending or reducing taxes, aggregate demand increases, thereby raising the level of real GDP.
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The above figure shows the demand curve for dollars in the yen/dollar exchange market. A movement from point A to point B means that the
A) quantity supplied of dollars has increased. B) quantity demanded of dollars has increased. C) quantity demanded of dollars has decreased. D) quantity demanded of yen has decreased.
If income were distributed according to the egalitarian principle of "to each exactly the same," then one problem would be that
A) there would be little or no incentive for individuals to take risky, hazardous, or unpleasant jobs. B) individuals would have an excess desire to invest in their own human capital. C) too many individuals would want to take risky jobs. D) productivity levels would probably become too high.
Which is correct?
A. Wealth is less equally distributed than income and therefore increases income inequality. B. Wealth is more equally distributed than income and therefore increases income inequality. C. Wealth is less equally distributed than income and therefore decreases income inequality. D. Wealth is more equally distributed than income and therefore decreases income inequality.
With an effective price ceiling, quantity demanded exceeds quantity supplied.
Answer the following statement true (T) or false (F)