A recession shows
A) supply always equals demand.
B) supply never equals demand.
C) thousands of businesspeople have misread market signals.
D) real GDP must be lower than nominal GDP.
E) not enough households are using their credit cards.
C
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The cross-price elasticity of demand is the percentage change in the quantity of good A that is demanded as a result of a percentage change in the price of good B.
Select whether the statement is true or false. A. True B. False
The amount of deadweight loss that results from a tax of a given size is determined by
a. whether the tax is levied on buyers or sellers. b. the number of buyers in the market relative to the number of sellers. c. the price elasticities of demand and supply. d. the ratio of the tax per unit to the effective price received by sellers.
Which of the following is not an example of moral hazard?
A. Investment banks use 40-1 leverage, knowing that if the market collapses, the government will come to the rescue. B. A backcountry skier takes an excessively dangerous run, knowing that local rescue crews will come to his aid if he gets in an accident. C. Insurance companies stopped offering insurance policies in New Orleans after a major hurricane, knowing the government will offer subsidies to draw people back. D. Domestic automobile companies fail to design high-quality fuel-efficient cars, hoping that the government will save them if oil prices skyrocket.
When actual output equals potential output there is ________ output gap and the rate of inflation will tend to ________.
A. an expansionary; decrease B. an expansionary; increase C. no; remain the same D. a recessionary; increase