Assume the economy is initially in equilibrium with real GDP equal to potential GDP. Other things equal, if the economy enters a recession, automatic stabilizers
A) reduce the magnitude of the multiplier and reduce the size of the decline in real GDP.
B) reduce the decline in investment expenditures and therefore increase the real short-term interest rate.
C) cause any decrease in real GDP to be offset by an equal decrease in the inflation rate.
D) raise the interest rate to prevent the output gap from falling below equilibrium.
A
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If we compare the U.S. GDP and the Chinese GDP
A) real GDP per person is about the same in the two countries. B) U.S. real GDP per person is less than China's real GDP per person once we adjust for currency differences. C) China's real GDP per person is less than real GDP per person in the United States. D) real U.S. GDP per person was much larger than China's real GDP per person when purchasing power parity prices are used but is less than China's real GDP per person when exchange rate prices are used.
Pollution reduction policies are likely to lead to: a. higher product prices
b. lower product prices. c. unchanged product prices. d. indeterminate changes in product prices.