Table 10-1
Aggregate Quantity
Aggregate Quantity
?
Demanded
Supplied
Price
(billions)
(billions)
Level
$3500
$2900
65
3400
3000
75
3350
3150
90
3250
3250
110
3100
3400
130
In Table 10-1, if full employment occurs at $3,100 billion, then
A. the economy experiences a recessionary gap of $150 billion.
B. the economy experiences a recessionary gap of $300 billion.
C. the economy experiences an inflationary gap of $150 billion.
D. the economy experiences an inflationary gap of $300 billion.
Answer: C
You might also like to view...
Suppose a bank has $200,000 in deposits and a reserve ratio of 15 percent. Its required reserves are
A) $350. B) $1,500. C) $3,000. D) $30,000.
The process of adjustment to a new long-run equilibrium in a perfectly competitive industry is complete when
A. no firms want to enter or exit the industry. B. every firm has adjusted its production process to make the most efficient use of its resources. C. investors in the industry receive the standard economy-wide rate of return on their investments. D. All of the responses are correct.
In autarky, when a community maximizes its standard of living, its production point is
A) below the production possibility frontier. B) on the production possibility frontier. C) above the production possibility frontier. D) Can't tell without more information.
Assume that full-employment national income is Y = $1,200 billion, the current equilibrium national income is Y = $1,600 billion, and the MPC = 0.8 . In order to bring the economy to a full-employment national income,
a. the recessionary gap can be closed by increasing aggregate expenditure by $80 billion b. the inflationary gap can be closed by cutting aggregate expenditure by $80 billion c. nothing is needed to bring the economy into full employment equilibrium d. the recessionary gap can be closed by increasing aggregate expenditure by $400 billion e. the inflationary gap can be closed by cutting aggregate expenditure by $400 billion