Suppose the economy is initially in short-run equilibrium at K. Which of the following stabilization policies could be used to close the gap?
Question 27 options:
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decrease government welfare spending

decrease personal income taxes

decrease government spending on defense

increase payroll taxes
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Question 28 (1 point)

At output level YK,
Question 28 options:

the economy is not in equilibrium because it operates with an output gap.

the economy is in short-run equilibrium and it operates with an inflationary gap.

the economy is in short-run equilibrium and it operates with a recessionary gap.

the economy is not in equilibrium because the unemployment rate is below the natural rate of unemployment.
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Question 33 (1 point)

Suppose the economy is initially in short-run equilibrium at K. Policy makers could either pursue a stabilization policy or allow the economy to adjust on its own. What is the difference between the two policy choices, if any?
Question 33 options:

Both policies would return real GDP to its potential at a price level of Pj.

Both policies would return real GDP to its potential at a price level of Ph.

A stabilization policy would return real GDP to its potential at a price level of Pj while a nonintervention policy would return real GDP to its potential at a price level of Ph.

A stabilization policy would return real GDP to its potential at a price level of Ph while a nonintervention policy would return real GDP to its potential at a price level of Pj.
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Question 34 (1 point)

Table 7-1 shows the aggregate demand and short-run aggregate supply curves for an economy. The potential level of output is $7.6 trillion.

If policymakers adopt a nonintervention policy, the economy gap
Question 34 options:

would return to potential output at a price level of 2.8.

would return to potential output at a price level of 1.2.

would return to potential output at a price level of 2.0.

would return to long-run equilibrium at an output level of $6 trillion.
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Question 35 (1 point)

Question 21 (1 point)

At output level YK,
Question 21 options:

potential output is less than actual output.

there is a surplus of real GDP.

the unemployment rate exceeds the natural rate of unemployment.

over time aggregate demand will rise to restore long-run equilibrium.
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Table 7-1 shows the aggregate demand and short-run aggregate supply curves for an economy. The potential level of output is $7.6 trillion.

What is the initial real GDP and price level?
Question 35 options:

Real GDP = 7.6 trillion; price level = 1.2

Real GDP = 7.6 trillion; price level = 2.8

Real GDP = 6.8 trillion; price level = 2.0

Real GDP = 7.8 trillion; price level = 1.0
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Question 36 (1 point)

A shift from SRAS1 to SRAS2 could have been caused by all of the following except
Question 36 options:

an increase in the consumer confidence index.

an increase in payroll tax.

a rise in health care costs which raises the cost of employing labor.

terrorist attacks that destroys an economy’s infrastructure.
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Question 37 (1 point)

Suppose the economy is initially in short-run equilibrium at B. Policy makers could either pursue a stabilization policy or allow the economy to adjust on its own. What is the difference between the two policy choices, if any?
Question 37 options:

A stabilization policy would return real GDP to its potential at a price level of Pa while a nonintervention policy would return real GDP to its potential at a price level of Pd.

A stabilization policy would return real GDP to its potential at a price level of Pd while a nonintervention policy would return real GDP to its potential at a price level of Pa.

Both policies would return real GDP to its potential at a price level of Pa.

Both policies would return real GDP to its potential at a price level of Pd.
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Question 41 (1 point)

Table 6-4

Table 6-4 shows some output and income data for Manna Land.

What is the value of Manna Land’s net foreign income?
Question 41 options:

-$100 billion

$1,100 billion

$100 billion

$200 billion
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Question 43 (1 point)

Suppose clothing manufacturer, Eddie Bauer, produced 10,000 pairs of jeans in 2005 but sold 9,200 pairs. How will this be recorded in GDP accounts?
Question 43 options:

The 9,200 pairs sold will be counted under the consumption component of GDP in 2005 and the 800 pairs that were not sold will not be included in GDP.

The 10,000 pairs of jeans produced would be counted as investment and will be included in GDP.

The 9,200 pairs sold will be counted as consumption and the 800 pairs that were not sold will counted as investment and both items will be included in 2005 GDP.

The 9,200 pairs sold will be counted under the consumption component of GDP in 2005 and the 800 pairs that were not sold will be included in 2006 GDP.
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Question 44 (1 point)

The equality between GDP and gross domestic income implies that income generated by final goods and services is equal to
Question 44 options:

personal consumption expenditures.

gross private domestic investment.

expenditures on final good and services.

total wages and other employee compensation.
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