If MPC = 0.9, equilibrium real GDP is 1,000 . and full-employment real GDP is 2,000 . then how much should government spending change to bring about full employment?
a. +1,000.
b. 100.
c. +900.
d. +100.
e. 0.9.
QUESTION 2According to classical economists,
a. prices are rigid.
b. both V and Q are variable for an economy in short-run equilibrium.
c. changes in M cause changes in V.
d. the velocity of money is constant.
QUESTION 3Jamal (now age 54) lost his job. He has very specialized skills that are no longer in demand. Jamal's unemployment is best classified as:
a. cyclical.
b. structural.
c. seasonal.
d. frictional.
e. voluntary.
QUESTION 4If MPC = 0.80, how much should government spending change to increase real GDP by 500?
a. -100.
b. +80.
c. -80.
d. +500.
e. +100.
QUESTION 5According to the quantity theory of money, a 10 percent increase in the money supply leads to a 10 percent increase in:
a. velocity.
b. unemployment.
c. the price level.
d. real GDP.
QUESTION 6Structural unemployment refers to unemployment resulting from:
a. technological change.
b. being in the wrong geographical location
c. taking the time to find the best job.
d. seasonal decreases in demand for labor.
e. a recession in the economy.
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