In the aggregate expenditures model, if aggregate expenditures (AE) are less than GDP, then GDP increases.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2The Federal Reserve System is run by the President of the United States.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3When per capita real GDP is increasing, real output is growing:
a. more rapidly than prices. b. more rapidly than population.
c. less rapidly than prices. d. less rapidly than population.
QUESTION 4Assume that an inflationary gap must be closed by reducing aggregate expenditures. If consumers refuse to cut spending on consumption and producers won't cut demand for investment goods, the President:
a. can do nothing.
b. must build more roads.
c. must borrow from Wall Street.
d. must increase Social Security expenditures.
e. must cut government spending.
QUESTION 5The Federal Reserve's most important function is to change the money supply in order to smooth out the business cycle.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6If a country's population growth rate exceeds the growth rate in its GDP, which of the following is true?
a. Per capita GDP is rising.
b. Per capita GDP is not changing.
c. Per capita GDP is falling.
d. None of the above.
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