Assume the equilibrium level of output is less than full employment. To achieve full-employment equilibrium, the aggregate demand curve must shift to the right by
A. An amount greater than the recessionary GDP gap because the spending increase raises the price level.
B. An amount less than the recessionary GDP gap because the spending increase causes the multiplier process to occur.
C. An amount less than the recessionary GDP gap because the spending increase raises output and prices.
D. The amount of the recessionary GDP gap.
Answer: A
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Which of the following statements is true?
A) Empirical arguments can be supported without the use of data. B) Using a large data set will strengthen the force of an empirical argument C) Using fewer observations will strengthen the force of an empirical argument. D) The number of observations used does not affect the strength of an empirical argument.
FICA is a payroll tax imposed on employers and workers that is used to fund Social Security and Medicare. Which of the following statements regarding the tax is true?
A) Most economists believe the burden of the tax falls almost entirely on workers. B) Congress wanted the burden of the tax to be greater for employers than for workers. C) Most economists believe the burden of the tax falls mostly on employers. D) Employers are required to pay a greater share of the tax than workers but most economists believe the burden of the tax is shared equally.