question
Assume that Canada imports products from the US. A large decrease in the Canadian incomes will cause which of the following in the short run?
answer
US net exports and real GDP will decrease
question
An increase in investment will likely cause which of the following in the short run?
answer
An increase in price level and a decrease in unemployment
question
An increase in the price of inputs will result in which of the following in the short run?
answer
A decrease in short-run aggregate supply and a decrease in output
question
An increase in investment will most likely cause which of the following in the long run?
answer
A rightward shift in the long run aggregate supply
question
Which of the following is true regarding Gross Domestic Product (GDP)?
answer
GDP, adjusted for inflation, measures economic growth over time
question
Assume an economy is at full employment when negative supply shock occurs. What will occur in the short-run?
answer
A decrease in aggregate demand
question
If wages are flexible, how will an economy in a recession automatically return to long-run equilibrium?
answer
Resource prices will decrease causing short run aggregate supply to increase
question
Which of the following is clearly not included in the calculation of GDP for the United States?
answer
A government payment to an individual on welfare
question
Which of the following is an example of expansionary fiscal policy?
answer
A decrease in personal income taxes
question
The value of which of the following is counted in the U.S. GDP?
answer
Salary bonuses given to investment bankers
question
Which of the following is the best example of a non-discretionary fiscal policy to combat demand-pull inflation?
answer
A progressive income tax system
question
When calculating GDP, the word investment is best defined as:
answer
Business spending on capital goods
question
Assume that current real GDP falls short of full-employment output by $400 billion and the MPC is 0.8. What is the minimum increase in government spending that could possibly bring about full employment?
answer
Eighty billion dollars
question
The income approach to calculating GDP mostly involves adding:
answer
Rent, wages, Interest, and profit
question
If a country's percent change in real GDP is positive, which of the following must be true?
answer
The country is producing more output
question
What is part of the reason that aggregate demand is downward sloping?
answer
Higher price levels decrease the purchasing power of money which decreases the quantity of consumption
question
A recession is commonly defined as two consecutive quarters of:
answer
decreasing real GDP
question
An increase in which of the following will decrease the aggregate demand in a given economy?
answer
Real interest rates
question
If labor force participation rate increased at the same time that the unemployment rate stayed the same, which of the following must be true?
answer
The total number of jobs the economy increased
question
Which of the following is the best example of structural unemployment?
answer
Assembly line workers are replaced by robots
question
Which of the following would most likely shift the short-run aggregate supply curve to the right?
answer
An increase in capital stock
question
If unemployment workers become discouraged and give up trying to fins work, which of the following is true?
answer
The unemployment rate would decrease
question
Which of the following is true regarding full employment?
answer
Full employment occurs when there is no cyclical unemployment
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