An inflationary gap will exist when
A. aggregate demand grows more slowly than aggregate supply.
B. there is downward pressure on prices.
C. expenditures are not equal to aggregate demand.
D. equilibrium GDP is greater than full employment GDP.
Answer: D
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In the final phase of benefit-cost analysis, one of the steps that is generally conducted is
a. to compare time-adjusted benefits to zero b. to compare time-adjusted costs to unity c. to determine if PVB and PVC are inversely related d. to determine if an option is feasible
If we have information about workers' marginal products, then total and average product can be found by
A) summing the marginal values to find the total and multiplying it times the number of workers to get the average. B) dividing marginal costs by the number of workers. C) summing the marginal values to find the total and dividing it by the number of workers to get the average. D) multiplying the average marginal product times the number of workers.
A change in the distribution of income which leaves total income constant will not shift the market demand curve for a product if
a. everyone has an income elasticity of demand of zero for the product. b. everyone has the same income elasticity of demand for the product. c. individuals have differing income elasticities for the product, but the average income elasticity for income gainers is equal to the average income elasticity for income losers. d. any of the above conditions occur.
Refer to the information. The recognition lag of fiscal policy is reflected in events:
Answer the question on the basis of the following sequence of events involving fiscal policy: (1) The composite index of leading indicators turns downward for three consecutive months, suggesting the possibility of a recession. (2) Economists reach agreement that the economy is moving into a recession. (3) A tax cut is proposed in Congress. (4) The tax cut is passed by Congress and signed by the president. (5) Consumption spending begins to rise, aggregate demand increases, and the economy begins to recover. A. 1 and 2. B. 2 and 3. C. 3 and 4. D. 4 and 5.