Consider the Equation GDP = F × (F_E/F)× (GDP/F_E)

question 55

Multiple Choice

Consider the equation GDP = F × (F_E/F) × (GDP/F_E) . If the economy enters a recessionary gap because of a negative aggregate demand shock, the equation changes in which of the following ways?

• A)the value of F_E/F falls as workers are laid off and equipment is used less intensively.
• B)the value of F_E/F rises as the rate of unemployment rises.
• C)the value of GDP/F_E falls as workers are laid off and equipment is used less intensively.
• D)there are no short- run changes in this case.
• E)the value of F falls as the rate of unemployment rises.

---

Definitions:

Scatter Plot

A graphical representation using dots to show the relationship between two quantitative variables, with each axis representing one of the variables.

Y-intercept

The point where a line or curve crosses the y-axis of a graph, indicating the value of the dependent variable when all independent variables are zero.

Regression Equation

A statistical method for estimating the relationships among variables, often used for predicting the value of a dependent variable based on the values of one or more independent variables.

Linear Regression

A statistical method for modeling the relationship between a dependent variable and one or more independent variables using a linear equation.