Which of the following is NOT a reason why real GDP can be expanded beyond a level consistent with its long-run growth path in modern Keynesian analysis?
A) Higher prices induce firms to hire more workers.
B) The existing capital stock can be used more intensively.
C) Prices and wages are flexible, allowing for needed adjustments.
D) In the short run, existing workers can work more hours.
Question 2
Institutions and laws, such as patent protection, that foster innovations lead to economic growth because they
A) give businesses loans to buy new machinery.
B) give confidence to consumers that the products they buy are safe.
C) allow the government control of the innovations.
D) give confidence to inventors that they will profit from their innovation.
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