. A recessionary gap is the result of the: a.actual level of output falling below the full-employment level of output. b.full-employment level of output falling below the actual level of output. c.full-employment level of output falling below the actual level of consumption.
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- 5 An economic recession means that _______. a. GDP is critically high b. Employment is increasing c. Output and employment is down d. Output is increasinga. What is the equilibrium rate of real GDP? $ __ billion b. If full-employment real GDP is $800 billion, what problem does this economy have? multiple choice This economy has a recessionary gap. This economy has an inflationary gap. This economy does not have a problem. c. How large is the real GDP gap? $ __ billionSuppose the Federal Reserve begins to Increase the supply of money at an Increasing rate. What Impact would that have on GDP, unemployment, and inflation?
- Macroeconomics question: In an economy, the government wants to increase aggregate demand by $50 billion at each price level to increase real GDP and reduce unemployment. If the MPS is 0.4, then it could increase government spending by: A. $20 billionB. $10 billionC. $40.50 billionD. $31.25 billionMacroeconomics: An economy is experiencing a high rate of inflation. The government wants to reduce consumption by $36 billion to reduce inflationary pressure. The MPC is 0.75. By how much should the government raise taxes to achieve its objective? A. $6 billionB. $12 billionC. $16 billionD. $9 billionExplain the effect of national income when price is flexible due to the following situation: a) An increase in the money supply. b) A reduction in government spending. (explain with graphs)
- The government is considering raising the tax rate on labor income. Explain the supply-side effects of such an action and use appropriate graphs to show the directions of change, not exact magnitudes. What will happen to: The supply of labor and why? The demand for labor and why? Equilibrium employment and why? The equilibrium before-tax wage rate and why? The equilibrium after-tax wage rate and why? Potential GDP? Explain your response with specifics and provide examples.3. . If the government wants to reduce unemployment, government spending should be--- and/or taxes should be-------. increased; increased decreased; decreased decreased; increased increased; decreased1. Consider an economy at full employment. If consumers and firms become less optimistic about the future economy then a) price levels will rise. b) output will rise. c) unemployment will rise.
- 45 Which of the following will occur if the government increases spending, keeping other things constant? a. The level GDP will drop. b. The aggregate demand curve will decrease. c. The marginal propensity to consume will increase. d. The aggregate demand curve will shift to the right. e. The average price level will increase.Macroeconomics: Assuming marginal propensity to consume is 0.5. If there is a shock to the economy that increases investment spending by 200 billion dollars what will the total Change to GDP be? (Ignore taxes and imports)1- We associate the term debt finance with the bond market, and we associate the term equity finance with the stock market. Select one: a. False b. True 2- Nominal GDP consist on production of goods and services which is valued at constant price. Select one: a. True b. False
