Ivy Software MBA Prepworks Fundamentals of Economics / Ivy Software MBA Prepworks Fundamentals of Economics questions with correct answers

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 D) the long-run aggregate supply curve to shift to the right - ANSWER-A. the long run aggregate supply curve to shift to the left If an economy is producing below its potential real GDP then: A) it is in an inflationary gap B) it is in a deflationary gap C) there is no unemployment D) the economy is operating at the natural rate of unemployment - ANSWER-B. it is in a deflationary gap Suppose that the economy is in a deflationary gap. Which of the following public policies would help the economy get back to potential real GDP? A) decrease the required reserve deposit ratio B) have the Federal Reserve buy back government bonds C) have the President and Congress cut marginal tax rates D) all of the above are correct - ANSWER-D. all of the above are correct One explanation for a positively sloped short run aggregate supply curve is that businesses sometimes mistake changes in the price level for a change in the value that consumers have for their product. (T/F) - ANSWER-True