..ooo T-Mobile Wi-Fi12:50 PM 23% Test III Di Dy Di Real GD 25. Which of the foll

Question

..ooo T-Mobile Wi-Fi12:50 PM 23% Test III Di Dy Di Real GD 25. Which of the following is true about the economy depicted in Figure 15-1? a. Tax incentives are being used to stimulate aggregate supply b. Tax incentives are being used to stimulate aggregate demand c. Contractionary monctary policy is being enacted to fight inflation d. Prices are rising but real GDP is falling 26· The economy's self-correcting mechanism (market forces) a. tends to push unemployment toward a specific point called the naturall rate of b. works bettcr at correcting inflationary gaps than recessionary gaps c. cannot work if the Phallips curve is vertical d. ensures that the ecoeomy will not have to endure a long period of high unemployment 27. What will tend to happen to wages if workers and employers foresee inflation? a. Both parties will seek to reduce nominal wages and therefore keep real wages the same. b. Nominal wages will remain constant but real wages will increase to avoid the effocts of c. Inflation crodes purchasing power of workers, and real wapes are unchanged d. Nominal wages will increase by an amount that kecps real wages constant 28. Potential GDP is an estimate of the economy's ability to produce goods and services if the a. labor force is fully employed. b. price level is stable. c, trade halance is zcro. d. federal et is balanced

Explanation / Answer

25)b
26)a

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