A rightward shift in the AS curve is best explained by:

aan increase in business taxes

b) a decrease in productivity

c a decrease in the price of imported resources

dan increase in wages

In an economy actual real output is $200 billion while potential real output is $240 billion. If the MPC is 0.625, the change in AD needed to eliminate the recessionary gap is:

a) an increase of approximately $40 billion

ban increase of approximately $25 billion

c) a decrease of approximately $12 billion

d) an increase of approximately $10 billion

e) an increase of approximately $15 billion

The time that elapses between the implementation of a tax cut passed by Parliament and its practical effect on the economy is an example of:

a) a decision lag

b. an implementation lag

c) an impact lag

d) a recognition lag

A recessionary gap is the amount by which:

a) equilibrium output exceeds potential output

b) withdrawals exceed injections at potential output

c) injections exceed withdrawals at potential output

d) potential output exceeds equilibrium output