A recessionary gap is defined as
a. an economy that is operating above its full-employment capacity
b. an economy that is operating at full-employment capacity
c. the amount by which aggregate expenditure exceeds the aggregate expenditure level needed to generate equilibrium national income at full employment without inflation
d. the amount by which aggregate expenditure falls short of the level needed to generate equilibrium national income at full employment without inflation
e. the path an economy takes out of a depression
D
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When economists say the quantity demanded of a product has increased, they mean the:
a. demand curve has shifted to the left. b. demand curve has shifted to the right. c. price of the product has fallen, and consequently, consumers are buying more of it. d. price of the product has risen, and consequently, consumers are buying less of it.
In regulated industries, the optimal regulation is to set price such that MC=P
a. True b. False Indicate whether the statement is true or false
In considering the net effect of expansionary fiscal policy on the trade deficit, the:
A. income and price effects work in the same direction, so the trade deficit is decreased. B. price effect offsets the income effect. C. income and price effects work in the same direction, so the trade deficit is increased. D. income effect offsets the price effect.