Which of the following is true?
a. The GDP gap is the difference between the full-employment gap real GDP and actual real GDP.
b. We desire economic growth because it increases the nation's standard of living.
c. Economic growth is measured by the annual percentage increase in a nation's real GDP.
d. Discouraged workers are a reason critics say the unemployment rate is understated.
e. All of the above answers are correct.
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6) According to Classical theory, the economy is self-regulating. If it is in a recessionary gap, what happens? Question options:
Wages rise, the SRAS curve shifts leftward, and both Real GDP and the price level rise.
Wages fall, the SRAS curve shifts rightward, the price level falls, and Real GDP rises.
Wages fall, the SRAS curve shifts leftward, the price level rises, and Real GDP falls.
none of the above
7) According to the classical economists, which of the following statements is true?
Question options:
| Financial markets ensure that S will equal I.. | |||||||||||
| Interest rate flexibility will ensure that planned saving is equal to planned investment. | |||||||||||
| There is a direct relationship between the amount individuals plan to save and the interest rate - higher rates cause people to save more and lower rates reduce savings. | |||||||||||
| Interest rates determine how much business firms invest - higher interest rates reduce investment and lower rates increase investment. | |||||||||||
| All of the above are true. 10) If actual Real GDP is greater than the full employment Real GDP, then the (actual) unemployment rate is Question options:
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