Answer the following questions true (T) or false (F)
1. At a short-run macroeconomic equilibrium, real GDP is always equal to potential GDP.
2. Stagflation occurs when aggregate supply and aggregate demand both increase.
3. A decrease in government spending will result in a decrease in the price level and a decrease in real GDP in the long run.
1. FALSE
2. FALSE
3. FALSE
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
Investment pools gathered from a small number of very wealthy individuals or institutions are referred to as:
A) capital investment. B) institutional savings. C) fixed deposits. D) hedge funds.
If one person's use of a good diminishes another person's enjoyment of it, the good is
a. rival in consumption. b. excludable. c. normal. d. exhaustible.
The great Franco-American cheese war of 2009 began with:
A. beef. B. Swiss cheese quotas. C. camembert cheese tariffs. D. cheddar cheese import restrictions.