The inflationary gap is the
a. inflation rate that will occur from excess aggregate demand.
b. budget deficit that caused the inflation to occur.
c. distance between the equilibrium level of output and the full employment level of output.
d. gap between expected and actual inflation.
c
You might also like to view...
What is the major difference between the classical model and the Keynesian model? Explain
What will be an ideal response?
An article in a recent economics periodical asks the question: "Is low inflation worth it?" By "it," the article probably means
a. the loss of comparative advantage. b. enduring externalities. c. unemployment. d. repealing the law of supply and demand. e. the opportunity cost of higher interest rates.
Because of their effect on interest rates,
A. capital flows weaken monetary policy but strengthen fiscal policy. B. capital flows strengthen monetary policy but weaken fiscal policy. C. the initial effects of a fiscal expansion on aggregate demand are strengthened. D. the initial effects of a monetary contraction are weakened.
Economists study the link between money and inflation because:
A. they want to understand how to keep inflation low and stable. B. the Fed needs to increase the money supply as prices increase. C. as prices increase money becomes more valuable. D. economists believe that inflation in the 3-6% range is healthy for an economy.