Suppose an economy is operating at its maximum sustainable output rate. Neither recession nor economic boom are present. Which of the following would be true?
a. The economy would be considered at full employment.
b. Actual GDP would exceed potential GDP.
c. Actual unemployment will be less than the natural rate of unemployment.
d. One hundred percent of the labor force is employed.
A
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Which of the following is an example of a normative question?
A) What fraction of an income tax cut will be spent on imported goods? B) How will an increase in the inheritance tax affect tax revenues? C) How will an increase in unemployment benefits affect the unemployment rate? D) Should Florida implement a state income tax to reduce its deficit?
The above figure shows the market for winter jackets. In an effort to keep the nation warm, the president places a price ceiling of $100 in the market for winter jackets
When the price ceiling is in place and taking account of the resources lost in search, consumer surplus ________ and producer surplus ________ compared to the equilibrium before the price ceiling was imposed. A) decreases; increases B) decreases; decreases C) increases; increases D) increases; decreases E) does not change; increases