Which of the following will happen if an economy’s current output coincides with full employment, but businesses begin to notice that consumers, government, businesses, and the foreign sector do not buy all that is being produced?

When we described the production possibilities curve, how did we describe production that is not efficient using this model?

Say companies invest in more capital. What happens to the production possibilities curve?

Any influence on inflation and employment must be transmitted through either aggregate supply or aggregate demand. Addressing these outcomes is why we model the macro economy in this way.

Any influence on inflation and employment must be transmitted through either aggregate supply or aggregate demand. Addressing these outcomes is why we model the macro economy in this way.

Say the Environmental Protection Agency imposes regulations on polluting and now businesses must pay to dispose of waste. Which of the following happens?

What does a recessionary gap indicate about the economy?

What does a recessionary gap indicate about the economy?

How is the opportunity cost of government spending?

Our book tells us that factor mobility…