Since most economies, on average, ________ over time, business cycles show a ________ trend.
A. suffer recessions; negative
B. sow down; negative
C. grow; positive
D. remain stable; zero
Answer: C
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A relatively steep aggregate demand curve indicates that
A) velocity is relatively constant. B) the economy is near full employment. C) inflation is relatively high. D) spending is insensitive to changes in the price level.
Critical assumptions behind the Laffer curve include
a. labor supply is inelastic. b. investment is very responsive to higher savings and lower interest rates. c. the economy is above the marginal tax rate that maximizes tax revenue. d. both b and c. e. all of the above.
In the aggregate expenditures model, if an economy operates above equilibrium GDP, there will be:
a. unplanned inventory accumulation. b. unplanned inventory depletion. c. an increase in GDP. d. an increase in employment.
GDP is: a. the value of all final goods and services produced domestically within a given period of time
b. the value of all final good and services produced anywhere in the world by a nation's firms within a given period of time. c. the value of all final goods and services produced by a government within a given period of time. d. the sum of all currency and coins in circulation.