Refer to Table 9.2. (Data are expressed in billions of dollars.)Table 9.2Full Employment Income (Output)Consumers Desire to SpendInvestors Desire to SpendTotal Private SpendingTotal Saving$500$300$250$________$________600375250$________$________700450250$________$________800525250$________$________If the full-employment level of income (YF) in Table 9.2 is $800 billion,
A. The economy is in equilibrium.
B. There is an inflationary gap of $250 billion.
C. There is a recessionary gap of $275 billion.
D. There is a recessionary gap of $25 billion.
Answer: D
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If the demand for cigarettes is highly inelastic, this indicates that:
a. higher cigarette prices will increase the demand for cigarettes. b. the price elasticity coefficient of cigarettes exceeds 1. c. the price elasticity coefficient of cigarettes equals 1. d. the quantity of cigarettes purchased by consumers is not very responsive to a change in the price of cigarettes.
A production possibilities curve will shift outward or to the right for all of the following reasons EXCEPT
A) an increase in the unemployment rate. B) an increase in the quality of the labor force. C) an improvement in production technology. D) a discovery of a new source of renewable energy.