If MPC = 0.8 and the economy is in equilibrium 500 below full-employment equilibrium, how much should government spending change to achieve full employment?
a. 100.
b. +80.
c. 80.
d. +500.
e. +100.
QUESTION 2Any item can successfully serve as money.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3Government involvement has become so prevalent in the U.S. economy that the U.S. economy is now generally considered to be a socialist economy.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4A recessionary gap:
a. is of little consequence in a capitalist economy.
b. represents actual physical output lost.
c. implies an equilibrium level of output less than the full-employment level.
d. is associated with rising labor prices.
e. will automatically close, according to the Keynesian model.
QUESTION 5By functioning as a unit of account, money provides a common measurement of the relative value of goods and services.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6One of the strengths of a socialist economy, according to those who advocate such a system, is that government intervention will enable a more equitable distribution of income.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 7Superhighways, public housing facilities, and defense projects are all ways that the President can:
a. close a recessionary gap
b. close an inflationary gap
c. combat inflation
d. raise unemployment
e. reverse the paradox of thrift
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