If the price of inputs falls and the level of consumer indebtedness rises:
a. Price index falls, and real GDP rises.
b. Price index falls, and real GDP falls.
c. Price index falls, and the change in real GDP is uncertain.
d. The change in price index is uncertain, and real GDP rises.
e. The change in price index is uncertain, and real GDP falls.
.C
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A decrease in the dollar price of the English pound will make
a. U.S. exports to England increase. b. U.S. exports less expensive for the English. c. imports from England more expensive for Americans. d. U.S. exports to England decrease.
Why might an expansion in government spending increase the severity of the coordination problem during a recession?
a. Increases in government spending will not affect the composition of aggregate demand. b. Congress is unlikely to approve increases in government spending during a recession. c. Spending increases will be driven by political considerations and will often flow into areas where resources are already fully employed. d. Government spending can be counted on to flow toward high productivity projects.