Suppose That the Real GDP Growth Rate Is 4 Percent

question 182

Multiple Choice

Suppose that the real GDP growth rate is 4 percent and that the economy undergoes a major economic shock, shifting the Solow growth curve to 2 percent. If wages are sticky, what will the growth rate of GDP be as a result?

• A) 1 percent
• B) 2 percent
• C) 4 percent
• D) 6 percent

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Definitions:

Gross Pay

The total amount of money earned by an employee before any deductions or taxes are applied.

Regular Rate

The hourly pay rate that is used to calculate overtime pay for non-exempt employees according to the Fair Labor Standards Act (FLSA).

Excess Hours

Hours worked beyond the normal or scheduled work time, often considered overtime.

FICA-Social Security

A U.S. government program funded by payroll taxes, providing retirement benefits, disability income, and other services to Americans.