Suppose There Are Two Economies That Are Identical in Every

question 95

Multiple Choice

Suppose there are two economies that are identical in every way with the following exception. Economy A has an unemployment compensation system while economy B does NOT have an unemployment compensation system. Now suppose both economies experience the same drop in planned investment. Which of the following is correct?

• A) Real GDP will fall more in economy A than in economy B.
• B) Real GDP will fall more in economy B than in economy A.
• C) Real GDP will fall the same in both economies.
• D) The effect on the relative size of the reduction in real GDP in the two economies is ambiguous.

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Definitions:

Responsibilities

The state or fact of having a duty to deal with something or of having control over someone.

Feeding

The act of supplying food to individuals or organisms for growth, health, and survival.

Negative Emotions

Feelings that are generally unpleasant or undesirable, such as sadness, anger, fear, or jealousy.

Anxiety

Anxiety is a mental health condition characterized by feelings of worry, anxiety, or fear that are strong enough to interfere with one's daily activities.