If the full-employment level of Macroland's aggregate economy is $1,600 billion and its economy is currently in an equilibrium at $2,100 billion, then Macroland
a. has a recessionary gap
b. needs an expansion in aggregate expenditures
c. needs a reduction in aggregate supply
d. has an inflationary gap
e. needs an aggregate demand expansion
D
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Doctors find that one aspirin per day reduces the risk of heart attacks. Demand for aspirin will
A) increase, so that equilibrium price and equilibrium quantity will increase. B) decrease, so that equilibrium price and equilibrium quantity will increase. C) increase, so that equilibrium price will decrease and equilibrium quantity will increase. D) increase, but the new equilibrium price and quantity are indeterminate.
According to the quantity theory of money, if the money supply grows at 25% and the inflation rate is 20%, the growth in real GDP is
A) 0.8%. B) 1.25%. C) 5%. D) 45%.
A newly issued bond with a face value of $12,000 and no coupon payments is priced at $9,000 . The bond will mature in one year. What is the yield on this bond?
a. 33.3 percent b. 25 percent c. $3,000 d. $1,909.09 e. It depends on the interest rate
If the expenditure schedule must be shifted upward to reach potential GDP, then the economy is experiencing a(n)
a. inflationary gap. b. precautionary gap. c. recessionary gap. d. expansionary gap.