Suppose the government wants to maintain a balanced budget. To achieve this goal, when the economy falls into recession government would need to ________ taxes, which would cause aggregate demand to ________

Two methods of measuring GDP are

A) the income approach and the expenditure approach. B) the income approach and the receipts approach. C) the goods approach and the services approach. D) the saving approach and the investment approach.

A 10 percent increase in the wage rate induces firms in an industry to reduce quantity demanded for labor by 5 percent in the first year. Five years later we would expect, other things constant,

A) the reduction in the quantity demanded of labor to be much greater than 5 percent. B) the reduction in the quantity demanded of labor to be less than 5 percent. C) the reduction in the quantity demanded of labor to be about 5 percent. D) the quantity demanded of labor to be back to its original level.