The gap that exists when equilibrium real Gross Domestic Product (GDP) is less than full employment real Gross Domestic Product (GDP) is called a(n)
A. supply gap.
B. inflationary gap.
C. recessionary gap.
D. employment gap.
Answer: C
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If price elasticity is greater than one, then demand is said to be elastic
Indicate whether the statement is true or false
The most powerful person at the Fed is
a. a director of a Federal Reserve bank b. a member of the Board of Governors c. a district bank president d. the president of the U.S. e. the chairman of the Board of Governors
Suppose that you have returned from your fishing expedition with 20,000 fish. The market price is $3 per fish. Your average fixed cost was $1 and your total variable cost was $5,000 . If the price jumps to $3.50 before you sell your first fish, how much extra profit, if any, do you earn?
a. $10,000 b. $25,000 c. $30,000 d. $45,000 e. $70,000
If the Fed reduces inflation 1 percentage point and this makes output fall 5 percentage points and unemployment rises 2 percentage points for one year, the sacrifice ratio is
a. 1/5. b. 2. c. 5/2. d. 5.