If the Economy Is in Equilibrium at the $400 Billion

question 220

Multiple Choice

If the economy is in equilibrium at the $400 billion level of GDP and the full-employment level of GDP is $500 billion:

• A)real and nominal GDP will both increase.
• B)economy does not reach full-employment unless aggregate expenditures increases.
• C)real GDP will increase, but nominal GDP will decrease.
• D)the price level will increase.

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Definitions:

Behavioral Economists

Researchers who study the effects of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions.

Minimum Payments

The smallest amount of money that one is required to pay on a debt by a specified due date to avoid defaulting.

Interest Costs

The cost associated with borrowing funds, typically expressed as a percentage of the total amount borrowed.

Self-Interest

That which each firm, property owner, worker, and consumer believes is best for itself and seeks to obtain.