1. Suppose the labour force in an economy is 100, its long run employment rate is 95% and its labour productivity (GDP/E) is 100. If current GDP is 850, the economy is in long and short run equilibrium.
2. If an aggregate production function exhibits diminishing marginal product and constant returns to scale then an increase in the labour force leads to a decrease in output per worker.
3. Neoclassical growth theory implies that a $100 million investment in a poor country (one with a small capital stock) will increase GDP in that country by more than a similar investment in a rich country.
4. It has been reported that cans of mackerel (similar to cans of tuna) are used as money in prisons. Since the cans of mackerel are not convertible into gold it is surprising that they serve as a form of money.
5. The increased availability of debit cards has resulted in an increase in the money supply.
6. In the long run, an economy that is open to capital flows can have investment greater than national saving.
7. When an economy goes into recession, a central bank that is interested in targeting inflation should pursue an expansionary monetary policy
8. When an economy goes into recession, a central bank that is interested in targeting inflation should pursue an expansionary monetary policy, but if its policy is mistimed, it risks becoming pro-cyclical rather than stabilizing.