If short-run equilibrium output equals 50,000 and potential output (Y*) equals 45,000, then this economy has a(n) ________ gap that can be closed by ________.
A. expansionary; decreasing government purchases
B. expansionary; increasing transfer payments
C. expansionary; decreasing taxes
D. recessionary; increasing government purchases
Answer: A
You might also like to view...
Use the following table to answer the question below.Number of UnitsTotal Utility110021903270434054006450What is the marginal utility of the second unit?
A. 90 utils B. 47.5 utils C. 95 utils D. 190 utils
Which of the following statements is TRUE?
A) Real GDP fluctuates around potential GDP. B) Potential GDP fluctuates around real GDP. C) Potential GDP is the same as real GDP. D) When all of the economy's resources are fully employed, the value of production is called real GDP.
The authors explain that the international copper cartel (CIPEC) has been largely ineffective in raising the price of copper in world markets, and the reason is mainly due to the relatively elastic demand for copper
Suppose the cartel recognized that there are multiple uses for copper, and some of the uses have few substitute products (e.g., copper electrical wire) while others have several close substitutes (e.g., copper water pipes). To increase profits, the cartel could raise the price of copper in the sub-markets with relatively inelastic demand. What else would the cartel have to do in order to make the cartel's action effective? A) The cartel would have to seek permission from the U.S. Department of Justice. B) The cartel would have to get the cooperation of all other copper producers in order to raise the price by some positive amount. C) The cartel would have to find a way to keep the buyers in the low-price market from reselling the copper to buyers in the high-price market. D) none of the above
A luxury good has
A) a negative income elasticity. B) a cross elasticity of one. C) a very high income elasticity. D) a negative price elasticity.