If the economy is producing output at the potential level of GDP, then:
a. an expansionary fiscal policy will increase real GDP in the long run.
b. deficit spending by the federal government will increase prices in the long run.
c. deficit spending will increase both, the real GDP and the prices in the long run.
d. a tax increase will not lower the aggregate demand.
b
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Countries with high rates of economic growth tend to have
A) a lower life expectancy at birth. B) low rates of technological advancement. C) a declining incidence of business cycle fluctuations. D) a labor force that is more productive.
A consumer's demand for CDs can be represented by a line with slope -b and intercept a. If the current price of CDs is $P, then the ratio of consumer surplus to total expenditures on CDs equals
A) (a - P)(a - bP). B) 1/2(a - P)(a - bP). C) D(a - bP). D) (a - P)/P. E) (a/b - P)/(2P).