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38.(Figure: Short- and Long-Run Equilibrium II) According to the figure Short- and Long-Run Equilibrium II, which would be the appropriate response on the part of the government upon viewing the state of the economy?A)Decrease government spending to close the recessionary gap.B)Lower tax rates to close the inflationary gap.C)Raise tax rates to close the inflationary gap.D)Increase government spending to close the recessionary gap.39.If the SRAScurve intersects the aggregate demand curve to the right of LRAS, the result will be:Page 12
40.An example of an automatic stabilizer is:41.Which lending agreement represents the highest real rate of return for a bank when it lends its money to a customer?42.The term human capitaldescribes improvement:A)in the robotics technology that can substitute for a human worker.B)in a worker's skills made possible by education, training and knowledge.C)made possible by better machines and the equipment available.D)in the technology available to the work force.43.If the multiplier is 4 and investment spending falls by $100 billion, the change in equilibrium income will be:44.Which situation is likely to increase the natural rate of unemployment?Page 13
Use the following to answer question 45:Figure: Loanable Funds Market45.(Figure: Loanable Funds Market) According to the figure Loanable Funds Market, the equilibrium interest rate and total quantity of lending in this loanable funds market are:46.Which goal does economists view as desirable?A)hyperinflationB)inflationC)deflationD)price stabilityPage 14
Use the following to answer question 47:Scenario: Closed Economy S= GDP is $12 trillion this year in a closed economy. Consumption is $8 trillion and government spending is $2 trillion. Taxes are $0.5 trillion.I