What does the potential GDP line illustrate? OA. The potential GDP line is vertical because potential GDP is independent of the price level. OB. The potential GDP line shows the relationship between potential GDP and the quantity of real GDP supplied. Oc. Potential GDP is illustrated by an upward-sloping curve. D. Along the potential GDP line the money wage rate is constant and the real wage rate rises as the price level rises. O O

What does the potential GDP line illustrate? OA. The potential GDP line is vertical because potential GDP is independent of the price level. OB. The potential GDP line shows the relationship between potential GDP and the quantity of real GDP supplied. Oc. Potential GDP is illustrated by an upward-sloping curve. D. Along the potential GDP line the money wage rate is constant and the real wage rate rises as the price level rises. O O

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 11PA

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Potential GDP is O a. a measure of the short term fluctuations in real GDP. O b. another name for nominal GDP. O c. equal to the maximum amount of goods and services that can be produced at any given time. O d. the level of output produced when the economy is fully employed. O e. another name for real GDP.
Match each definition to the appropriate component of aggregate demand. Definition The sum of the expenditures of business firms on new plant, equipment, and software and of households on new homes The goods and services purchased by all levels of government The total amount spent by consumers on newly produced goods and services The difference between exports and imports ⒸNet exports O Government spending Consumer Expenditure Which of the following components represents the largest piece of aggregate demand? O Consumer expenditure O Investment spending O Which of the following components represents the smallest piece of aggregate demand? O Consumer expenditure O Government spending O Investment spending ONet exports Investment Spending Government Spending Net Exports O O O O
Over the business cycle, O A. only real GDP fluctuates around its trend and potential GDP remains equal to its trend. O B. potential GDP fluctuates around its trend. O C. only potential GDP fluctuates around its trend and real GDP remains equal to its trend. D. neither real GDP nor potential GDP fluctuate because they just grow smoothly along their trends. O E. real GDP fluctuates around its trend. Click to select your answer.
In the Aggregate Expenditure framework, which of the following government policy choices offer a possible solution to inflationary pressures? (Check all that apply.) Select all that apply: O a. A reduction in taxes for businesses that increase investment. O b. A major decrease in what the government spends on healthcare. Oc. A decrease in military spending. O d. A tax increase on consumer income. The United States is Canada's major export market. Suppose there is a decrease in American real GDP. The impact of this change will be a in which will mean a shift in the Canadian AE function. As a result, Canadian real GDP will decrease consumption investment upward downward net exports increase
Suppose that the economy is presently operating at full employment. If there is an increase in national income, which of the following will occur automatically? O A. An increase in tax rates. O B. An increase in unemployment compensation spending. O C. An increase in tax revenues. O D. A decrease in tax rates.
Suppose an economy can be represented by the folowing table, in which employment is in millons of workers and GDP and AE are expressed in billions of dollars: Employment 100 Real GDP Aggregate Expenditures 1275 1350 1425 1500 1575 1650 1200 105 1300 1400 1500 1600 1700 110 115 120 125 fut employment is 120 milion workers? What is its what kind of expenditure oap exists size? Suppose government spending, taxes, and net exports ane all independent of the level of rcal GDP. What is the multplier an ths economy? below the econemy's potential, what is the size of the recessionary expenditure qapt
Real GDP is best described as: A measure of a nation's output and employment holding wages constant. A measure of a nation's output holding prices constant. A measure of a nation's output at the current level of prices. OOOO. A measure of a nation's prices holding output constant. A measure of a nation's prices at the current level of output. A Moving to the next question prevents changes to this answer. E JUL 19 tv 10 O A
Suppose that for a particular economy, nominal GDP in 2015 falls, compared to its previous level in 2014. Given this information, we know with certainty that O more information is needed to answer this question. O both the GDP deflator and real GDP fell during 2015. O the GDP deflator decreased during 2015. O real GDP decreased during 2015.
What likely occurred during 2018 if nominal GDP did not change and real GDP decreased, relative to the year 2017? Select one: O a. Total production of goods and services in the economy did not change in 2018. cross out O b. The economy experienced deflation during 2018. cross out cross out O c. The price level did not change during 2018. O d. Total production of goods and services in the economy increased during 2018. cross out cross out O e. The economy experienced inflation during 2018
Ceteris paribus, which of the scenarios below will unambiguously lead to an increase in real GDP? O a. The production of final goods and services decreases, but prices increase. O b. The prices of final goods and services decrease. O c. The prices of final goods and services increase. O d. The production of final goods and services increases. ge
In some year, nominal GDP is $5.36 trillion and real GDP is $4.78 trillion. What is the value of the GDP deflator for that year? Select one: O a. 112.1 O b. 2 O c. 0.892 O d. $0.58 trillion Check
Under the expenditure categories to measure GDP, why are net exports (exports minus imports) included instead of just exports? Select one: a. GDP is a measure of all final goods and services purchased by American citizens around the world. O b. The imports include goods that were produced with intermediate goods made by American firms. O c. The values of C, I and G include spending on all final goods and services, including imports, and these imports must be subtracted out. O d. The government wants to ignore income that Americans spend on foreign-made products.