Assuming an Upward-Sloping AS Curve,if an Economy Is at Full

question 54

Multiple Choice

Assuming an upward-sloping AS curve,if an economy is at full employment and consumption spending decreases while all other levels of spending remaining constant,then

• A)Increased unemployment results.
• B)Any GDP gap disappears.
• C)Inventory levels are less than desired until a new equilibrium is reached.
• D)Changes in consumption spending have no impact on GDP.

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Definitions:

Human Capital

The collective skills, knowledge, and other intangible assets of individuals that can be used to create economic value.

Surplus Labor

This term refers to the portion of the labor force which is not currently being employed to its full potential, often leading to unemployment or underemployment in an economy.

Agriculture

The science or practice of farming, including cultivation of the soil for the growing of crops and the rearing of animals to provide food, wool, and other products.

Capital-Using Technological Advance

A capital-using technological advance refers to innovations that increase the amount of capital per worker used in the production process, potentially enhancing productivity but also increasing capital costs.