How will an increase in government expenditures during a recession be reflected in GDP?
a. An increase in government spending will reduce aggregate demand and decrease GDP.
b. An increase in government spending will not affect GDP.
c. An increase in government spending will increase GDP, but only if it is directed toward economically productive projects.
d. The government spending will increase GDP even if the spending encourages rent seeking and other unproductive activities.
D
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Disease, poor nutrition, and substandard health care in developing nations can reduce growth in an economy by
A) reducing physical capital. B) reducing human capital. C) increasing technological change. D) increasing labor productivity.
The monetary policy (MP) curve indicates the relationship between
A) the Federal Funds Rate and the real interest rate. B) the Federal Funds Rate and the inflation rate. C) the inflation rate and the expected inflation rate. D) the real interest rate the central bank sets and the inflation rate.