Unions are often thought to cause conflict between different groups of workers -- between the insiders who benefit from high union wages and the outsiders who do not get the union jobs

The multiplier principle indicates that if business decision makers become more optimistic about the future and, as a result, increase their investment expenditures by $82 billion, real GDP

a. will increase by less than $82 billion if the economy was initially operating well below capacity. b. will increase by more than $82 billion if the economy was initially operating well below capacity. c. will increase by more than $82 billion if the economy was initially operating at full-employment capacity. d. will decline if the marginal propensity to consume is less than 1.

Assume you borrow funds to buy a new car at 5 percent interest and you think that the economy-wide rate of inflation over the life of the loan will be 4 percent. If you are correct in your assumption, your real rate of interest on the car loan will be

A. 5 percent. B. 4 percent. C. 1 percent. D. 2 percent.