Which of the following would not be emphasized in a capitalist economy?
A. Private ownership of capital and other resources
B. Competition and decentralized decisions
C. Reliance on market forces to coordinate economic activity
D. Prevention of owners of capital from exposing this resource to risk
Answer: D
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The line showing potential GDP is a vertical straight line because
A) it represents the minimum level of real GDP in a recession. B) when nothing else changes, a higher price level has no effect on real GDP. C) the aggregate supply curve is upward sloping. D) economists are unsure about how to determine potential GDP. E) there is only one level of full employment at any point in time.
Based on our understanding of the model presented in Chapter 3, we know that an increase in c1 (where C = c0 + c1YD) will cause
A) the ZZ line to become steeper and a given change in autonomous consumption (c0 ) to have a smaller effect on output. B) the ZZ line to become steeper and a given change in autonomous consumption (c0 ) to have a larger effect on output. C) the ZZ line to become flatter and a given change in autonomous consumption (c0 ) to have a smaller effect on output. D) the ZZ line to become flatter and a given change in autonomous consumption (c0 ) to have a larger effect on output.