If the government uses fiscal policy to close a recessionary gap,
A) taxes must be cut by more than the gap because of the tax multiplier.
B) government expenditure must be increased by more than the gap because of the government expenditure multiplier.
C) taxes must be raised by more than the gap because of the tax multiplier.
D) government expenditure can be increased by less than the gap because of the government expenditure multiplier.
E) taxes can be raised by less than the gap because of the tax multiplier.
D
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Average labor productivity tends to be
A) procyclical and less variable than real GDP. B) procyclical and more variable than real GDP. C) countercyclical and less variable than real GDP. D) countercyclical and more variable than real GDP.
If there is a shortage of loanable funds, then
a. the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is above equilibrium. b. the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is below equilibrium. c. the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is above equilibrium. d. the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is below equilibrium.