Ivy Software MBA Prepworks Fundamentals of Economics / Ivy Software MBA Prepworks Fundamentals of Economics questions with correct answers
Assume that the economy is currently at potential real GDP. Which of the following would put the economy in an inflationary gap?
A) Temporary increase in wages
B) greater stock market wealth
C) higher business taxes
D) decrease in income abroad - ✔✔✔ANSWER-greater stock market wealth
If an economy is producing below its potential real GDP, then it is in a(n) - ✔✔✔ANSWER-deflationary gap
Which curve reflects the real GDP demanded by all groups in the economy at any given price level? - ✔✔✔ANSWER-Aggregate demand curve
Suppose the economy is in an inflationary gap. Which of the following public policies could help the economy get back to potential real GDP?
A) increase unemployment insurance benefits
B) decrease the required reserve deposit ratio
C) Increase the discount rate
D) have the Federal Reserve buy back government bonds - ✔✔✔ANSWER-C. increase the discount rate
A permanent decrease in productivity in the economy causes:
A) the long run aggregate supply curve to shift to the left
B) the aggregate demand curve to shift to the south-west
C) the aggregate demand curve to shift to the north-east
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