Assume that full-employment real GDP is Y = $1,200 billion, the current equilibrium real GDP is Y = $1,600 billion, and the MPC = 0.8 . In order to bring the economy to a full-employment real GDP,
a. a recessionary gap must be bridged by increasing aggregate expenditures by $80 billion.
b. an inflationary gap must be bridged by cutting aggregate expenditures by $80 billion.
c. nothing is needed to bring the economy into full employment equilibrium.
d. a recessionary gap must be bridged by increasing aggregate expenditures by $400 billion.
e. an inflationary gap must be bridged by cutting aggregate expenditures by $400 billion.
b
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Which of the following statements is true of the scientific method?
A) The scientific method may not reveal a "true" model of the world. B) The scientific method does not require the models to be tested with data. C) The scientific method used by economists and scientists is independent of empiricism. D) The scientific method can help develop accurate models even when data are unavailable.
Those who criticize individuals who choose to drive a relatively inefficient sport utility vehicle (SUV) might mistakenly
A) assume everyone faces the same relative prices. B) assume everyone has the same preference set. C) assume everyone has the same budget constraint. D) All of the above.