In a market-based economy, the government:

A striking conclusion of the Solow model is that in the absence of productivity growth, in the long run

A) the economy reaches a steady state. B) consumption per worker equals the capital stock per worker. C) consumption per worker equals output per worker. D) consumption per worker equals investment per worker.

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.