Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 17, Problem 2QP
To determine
Role of advance in technology for produce more output or real GDP.
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When real GDP declines during a recession, what typically happens to consumption, investment, and the unemployment rate? During an economic boom, what happens to these variables?
What are some example possible reasons for a decline in the level of potential GDP?
Which of the following will NOT lead to an increase in real GDP?
A.
On average, people in a country decide to increase the number of hours they work by 5%.
B.
Spending on homeland security increases in response to a terrorist attack.
C.
The price level and nominal GDP increase by 10%.
D.
Due to lower interest rates by the Fed investors increase their investments
Chapter 17 Solutions
Economics (MindTap Course List)
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- Which of the following will NOT lead to an increase in real GDP? A. On average, people in a country decide to increase the number of hours they work by 5%. B. Spending on homeland security increases in response to a terrorist attack. C. The price level and nominal GDP increase by 10%. D. Due to lower interest rates by the Fed investors increase their investmenarrow_forwardIf you read in the newspaper that the United States’ 2015 real GDP declined while nominal GDP for 2015 grew, how could you explain this?arrow_forwardwhat might explain the differences seen in the role of consumption and investment during the recession and recovery phases of the business cycle? what about the period before the recession?arrow_forward
- When real GDP declines during a recession, what typically happens to consumption, investment, and the unemployment rate?arrow_forwardUsing the circular flow model, explain what might happen to the level of income of an economy if it experiences an increase in exports and an increase in taxes.arrow_forwardAccording to the classical perspective (the one from the 19th century that I described at the beginning of my first lecture video), what kinds of things could cause recessions or other economic downturns?arrow_forward
- Suppose most business executives expect a slowdown in the economy (slower sales growth for their firm). How might that affect the economy?arrow_forwardSuppose real GDP exceeds potential real GDP. If the government decreases its expenditures on goods and services, then real GDP _______and the price level ________ (a) Decreases; rises (b) Increases; falls (c) Decreases; falls (d) Increases, risesarrow_forwardResearch on the effects of recessions on the real level of GDP shows that recessions cause only temporary reductions in real GDP, which are offset by growth during the expansion phase. recessions cause large, permanent reductions in the real level of GDP. recessions cause both temporary and permanent declines in real GDP, but most of the decline is temporary. recessions cause both temporary and permanent declines in real GDP, but most of the decline is permanent.arrow_forward
- What is the central economic idea humorously illustrated in Art Buchwald’s piece, “Squaring the Economic Circle”? How does the central idea relate to recessions, on the one hand, and vigorous expansions, on the other?arrow_forwardRecessions hit parts of the economy differently. What part of the economy is usually hurt the most during a recession? Durable goods. Non-durable goods Consumer non-durable goods Consumer services like dentist appointmentsarrow_forwardWhen real GDP declines during a recession, what typically happens to consumption, investment, and the unemployment rate? (Macroeconomic field of question)arrow_forward
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