Question 1
At ________ levels of output, the economy can expand with little or no increase in the overall price level because firms likely hold excess labor and capital, and production can be increased without causing input prices to increase.
◦ high
◦ low
◦ full employment
◦ full capacity
Question 2
According to the accelerator effect, there is a tendency for investment to decrease when aggregate output decreases, thus accelerating the decline of output.
◦ true
◦ false