Assume equilibrium real GDP per year is equal to full-employment real GDP. Which of the following will cause a recessionary gap?
A. a reduction in aggregate demand
B. an increase in aggregate demand
C. a discovery of a new raw material
D. a temporary reduction in the price of oil
Answer: A
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Explain the endowment effect
What will be an ideal response?
Temporary tax cuts will have a greater influence on consumption expenditures than temporary tax cuts
Indicate whether the statement is true or false
An unanticipated shift to a more expansionary macro-policy that leads to a higher-than-expected rate of inflation will
a. place downward pressure on prices. b. temporarily reduce unemployment. c. temporarily reduce output. d. temporarily reduce the natural rate of unemployment.
The aggregate cost of unemployment can be measured by the:
A. amount by which actual GDP exceeds potential GDP. B. amount by which potential GDP exceeds actual GDP. C. excess of real GDP over nominal GDP. D. excess of nominal GDP over real GDP.