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

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Use the following graph to answer the next question. Price Level 0 AS3 AS₁ AS₂ Real Domestic Output, GDP Which of the following factors will shift AS1 to AS2? O An increase in real interest rates O A decrease in business subsidies O An increase in input prices O A decrease in business taxes.
An inflationary gap is the amount by which: O Equilibrium GDP falls short of the full-employment GDP. O Aggregate expenditures exceed any given level of GDP. Saving exceeds investment at the full-employment GDP. Aggregate expenditures exceed the full-employment level of GDP. A Moving to another question will save this response. ere to search DELL
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The expenditure approach measures GDP by adding together Select one: O A. wages, salaries and supplementary labour income, and other factor incomes. O B. the total expenditures of consumers, firms, net exporters, and by governments at all levels. O C. wages, salaries and supplementary labour income, other factor income, subsidies paid by the government, indirect taxes paid, and income of nonfarm unincorporated businesses. the total expenditures of consumers and firms. compensation of employees, rental income, corporate profits, net interest, proprietors' income, indirect taxes paid, and capital consumption expenditures, and by subtracting subsidies paid by the government. O D. O E.
If there is excess demand for goods and services in the economy at the current price level, then the: If there is excess demand for goods and services in the economy at the current price level, then the: A. price level will remain the same B. GDP will fall C. price level will increase D. price level will decrease
2. The model of aggregate demand and supply represents O A. the relationship between the real Gross Domestic Product and the overall price level O B. the changes in Gross Domestic Product over time O C. the relationship between the inflation and unemployment rates O D. the changes in the price level over time
Why is the potential GDP line vertical? The potential GDP line is vertical because _______. A. potential GDP is dependent on the price level B. with a constant money wage rate, the real wage rate rises as the price level rises C. potential GDP and the quantity of real GDP supplied are equal at every price level D. potential GDP is independent of the price level
QUESTION 17 In determining GDP by the expenditures method, it is appropriate to use net investment rather than gross investment as a measure of investment spending. O True O False
tion 6 According to aggregate supply and aggregate demand analysis, what happens to P (price level) and Q (GDP) if X increases? Oa. Prices decrease and GDP decreases. O b. Prices increase and GDP decreases. Oc Prices stay the same and so does GDP i AS and AD curves shift by the same amount O d. Prices increase and GDP increases. estion will save this response.
Aggregate Supply and Aggregate Demand Real GDP Supplied Price $ 250 $ 500 $ 750 $1000 1500 3000 4500 4500 Real GDP Demanded 5500 5000 4500 4000 a. Plot the aggregate supply and aggregate demand curves on the same graph. b. State the equilibrium real GDP and price level. c. At the equilibrium GDP from part b, is the economy experiencing a recessionar gap? Explain why it is or is not experiencing a recessionary gap. d. State what happens to the nominal wages and the real wage in the short run phase of the aggregate supply.
Potential GDP Aggregate expenditure AE, E, 45° Real GDP (Y) On the 45 degrees line: O A. GDP is equal to aggregate expenditure OB. GDP is greater than aggregate expenditure OC. Aggregate expenditure is constant OD. GDP is constant Aggregate Expenditure
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