Within the framework of the aggregate expenditures model, what will happen if an economy is operating at a real GDP greater than full-employment real GDP?
a. An inflationary gap exists.
b. Real GDP will fall.
c. The inventories of firms will rise.
d. Firms will cut back on their current rate of output.
a
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While Africa has the largest numbers of working children, Asia has the highest proportion of working children, with an estimated one in four employed
Indicate whether the statement is true or false
Suppose that government purchases of goods and services increase by $200 and at the same time lump-sum taxes increase by $200 . Which of the following is true in this case?
a. Whether the budget deficit will increase or decrease will depend on the value of the marginal propensity to consume. b. The budget deficit will increase by $200 c. The budget deficit will increase by $400. d. The budget deficit will decrease as the economy expands. e. There will be no change in the budget deficit.