When the economy is to the right of the potential GDP, what type of gap exists?
a. An unemployment gap
b. A structural gap
c. A recessionary gap
d. An inflationary gap
d. An inflationary gap
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The long-run aggregate supply curve is vertical
Indicate whether the statement is true or false
Expansionary monetary policy during periods of underutilized resources can cause
A) real Gross Domestic Product (GDP) to increase without an increase in the price level. B) real Gross Domestic Product (GDP) to increase with a decrease in the price level. C) real Gross Domestic Product (GDP) to increase with an increase in the price level. D) nominal Gross Domestic Product (GDP) to increase but cannot affect real Gross Domestic Product (GDP).
The market for a perfectly competitive industry clears at a price of $3, and the minimum average cost for all firms is $2.50 . In the long run, we would expect an increase in
a. each firm's output. b. the number of firms. c. each firm's profit. d. each firm's average cost.
If inflation expectations rise, the short-run Phillips curve shifts
a. left. If inflation remains the same, unemployment falls. b. left. If inflation remains the same, unemployment rises. c. right. If inflation remains the same, unemployment falls. d. right. If inflation remains the same, unemployment rises.