Assuming the economy in the graph shown is currently at equilibrium A, we can conclude:
A. the economy is in a recession.
B. the economy is producing less than its potential level of output.
C. there must be unemployment of resources.
D. All of these are true.
D. All of these are true.
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Equal increases in government spending and taxes will:
a. cancel each other out so that the equilibrium level of real GDP will remain unchanged. b. lead to an equal decrease in the equilibrium level of real GDP. c. lead to an equal increase in the equilibrium level of real GDP. d. lead to an increase in the equilibrium level of real GDP real GDP that is larger than the initial change in government spending and taxes. e. lead to an increase in the equilibrium level of output that is smaller than the initial change in government spending and taxes.
Which of the following will increase investment spending in the economy, holding everything else constant?
A) an increase in the federal government surplus B) an increase in the budget deficit C) an increase in consumer dissavings D) an increase in transfer payments