For policymakers, the problem with a recessionary gap is ________ and the problem with an expansionary gap is ________.
A. a tendency for inflation to increase; wasted resources
B. an increase in cyclical unemployment; an increase in structural unemployment
C. wasted resources; a tendency for inflation to increase
D. an increase in structural unemployment; an increase in cyclical unemployment
Answer: C
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A policy of a tax cut combined with increases in government purchases would shift the aggregate demand curve to the left
a. True b. False Indicate whether the statement is true or false
In Econland autonomous consumption equals 700, the marginal propensity to consume equals 0.80, net taxes are fixed at 50, investment is fixed at 100, government purchases are fixed at 100, and net exports are fixed at 40. Aggregate expenditure equals
A. 900 + 0.80Y. B. 940 + 0.80Y. C. 990 + 0.80Y. D. 990 + 0.20Y.