In response to changing inventories in Figure 9.8, if the economy produces at full employment of $400 billion, firms will attempt to
Multiple Choice
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Reduce employment and buy more machinery.
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Reduce employment and buy less machinery.
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Increase employment and buy less machinery.
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Increase employment and buy more machinery.
Homework Answers
Solution:
The correct option is Reduce employment and buy less machinery
There is a recessionary gap because full employment is greater so the firm will hire less labor and less Machinery
Add Answer to:
In response to changing inventories in Figure 9.8, if the
economy produces at full employment of...
Exhibit 8-8 Aggregate expenditures function Real consumption and Investment expenditures (trillions of dollars per year) om...
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If the economy is close to full employment, an increase in government spending may increase GDP...
If the economy is close to full employment, an increase in government spending may increase GDP in the short run, but in the long run, this policy may: reduce investment in new capital. make domestic businesses less competitive in international markets if the dollar appreciates in value raise interest rates and reduce consumer expenditures on cars and new houses All of these options are correct Which of the following is considered contractionary fiscal policy? The government increases defense spending due...
#6 Consider an economy that is operating at the full-employment level of real GDP with MPC=0.7...
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1. Equilibrium GDP can operate at, below, or above full employment GDP. True/False 2. Imports have the same effect on the current size of GDP as A) exports B) investment C) consumption D) savings 3. With an MPC of 0.75, a $10 billion decrease in taxes will decrease equilibrium GDP by $30 billion. True/False 4. If equilibrium GDP exceeds full employment GDP, a recessionary gap exists. True/False 5. The economy below would be characterized as a domestic output AE, closed...
a Look at the information provided: The economy is at full employment, the inflation rate is...
a Look at the information provided: The economy is at full employment, the inflation rate is What would be the long-run effects of new government infrastructure expenditure? 2 percent a year, and the federal budget deficit is The long-run effects of new infrastructure expenditure are 3.5 percent of GDP. rate and in potential GDP. Congress wants to make real GDP grow faster and is debating whether to spend O A. rise in the interest; an increase more on infrastructure or...
9. Refer to the below table. For the open economy, the equilibrium GDP is domestic output...
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Check answers please ? s) If the economy is in a recession, 8) A) The economy...
Check answers please ?
s) If the economy is in a recession, 8) A) The economy suffers from structural unemployment, which can be alleviated by debt refinancing. B) Larger deficits will decrease the national debt. C) Deficit spending will not increase the size of the debt because interest rates will be falling. D) It is operating inside the production posibilities curve, and the opportunity cost of deficit spending is zero. 9 9) An increase in unemployment, ceteris paribus, A) Reduces...
Use the data in the following table for a private closed economy to answer the next...
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sing and government purchases are leakages. 8. In a mixed closed economy: A taxes and government...
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5. The economy below would be characterized as a domestic output AE, closed economy government 200...
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Exhibit 8-8 Aggregate expenditures function Real consumption and Investment expenditures (trillions of dollars per year) om 0 1 2 3 4 5 6 7 8 9 10 Real disposable income (trillions of dollars per year) 23. In Exhibit 8-8, what is the households' marginal propensity to consume (MPC)? 20.5. c. 0.8. b. 0.75 d. 1. 24. Using the Keynesian aggregate expenditures model, which of the following is true? a Macro equilibrium may occur at levels of real GDP other than...
If the economy is close to full employment, an increase in government spending may increase GDP in the short run, but in the long run, this policy may: reduce investment in new capital. make domestic businesses less competitive in international markets if the dollar appreciates in value raise interest rates and reduce consumer expenditures on cars and new houses All of these options are correct Which of the following is considered contractionary fiscal policy? The government increases defense spending due...
a Look at the information provided: The economy is at full employment, the inflation rate is What would be the long-run effects of new government infrastructure expenditure? 2 percent a year, and the federal budget deficit is The long-run effects of new infrastructure expenditure are 3.5 percent of GDP. rate and in potential GDP. Congress wants to make real GDP grow faster and is debating whether to spend O A. rise in the interest; an increase more on infrastructure or...
Check answers please ?
s) If the economy is in a recession, 8) A) The economy suffers from structural unemployment, which can be alleviated by debt refinancing. B) Larger deficits will decrease the national debt. C) Deficit spending will not increase the size of the debt because interest rates will be falling. D) It is operating inside the production posibilities curve, and the opportunity cost of deficit spending is zero. 9 9) An increase in unemployment, ceteris paribus, A) Reduces...
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