Assume prices and wages are flexible. Ceteris Paribus, a fall in private consumption spending will cause

The government taxes nominal interest income and high inflation has led to a reduction in investment in physical capital. a. shoe-leather cost b. menu costs c. relative price variability d. tax distortions

In 2001, the United States was in recession. Which of the following things would you not expect to have happened? Select one: O increased layoffs and firings a higher rate of bankruptcy O increased claims for unemployment insurance O increased investment spending

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Consider an economy with a corn producer, some consumers, and a government. In a given year, the corn producer grows 30 million bushels of corn and the market price for corn is $5 per bushel. Of the 30 million bushels produced, 20 million are sold to consumers, 5 million are stored in inventory, and 5 million are sold to the government to feed the army. The corn producer pays $60 million in wages to consumers and $20 million in taxes to the government. Consumers pay $10 million in taxes to the government, receive $10 million in interest on the government debt, and receive $5 million in Social Security payments from the government. The profits of the corn producer are distributed to consumers.(a) Calculate GDP using (i) the product approach, (ii) the expenditure approach, and (iii) the income approach.(b) Calculate private disposable income, private sector saving, government saving, national saving, and the government deficit. Is the government budget in deficit or surplus? Explain your…

When households cut back on their spending, then in the short run we tend to see the price level ______ and equilibrium output __________. fall; fall rise; fall rise; rise fall; rise