When potential GDP increases, long-run aggregate supply also increases
Indicate whether the statement is true or false
TRUE
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A perfectly competitive firm maximizes its profits by producing the amount of output such that
A) MR = P. B) MR = MC. C) P = AVC. D) P = ATC.
If price is equal to average variable cost, a perfectly competitive firm breaks even
Indicate whether the statement is true or false
In Figure 9.9, at a full-employment output level of $150 billion, the gap by which actual aggregate income or GDP is different from full-employment income or GDP is
A. An inflationary gap of $25 billion income. B. An inflationary gap of $50 billion income. C. A recessionary gap of $50 billion income. D. Expenditure equilibrium.
Structural unemployment:
A. is also known as frictional unemployment. B. is the main component of cyclical unemployment. C. is said to occur when people are waiting to be called back to previous jobs. D. may involve a locational mismatch between unemployed workers and job openings.