How is it possible for output to be greater than potential GDP?
What will be an ideal response?
Just as students can sometimes push themselves to increase the amount of studying they do, temporarily increasing their scholarly output above their potential in normal circumstances, the economy can likewise temporarily push itself to produce more than it does in normal times. However, in both cases, the increased production is not sustainable in the long run. Pulling all-nighters studying and writing papers at the end of the semester is not sustainable and puts a strain on students. Likewise, producing above potential puts a strain on an economy's resources.
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All of the following are examples of oligopolistic markets except
A) seafood restaurant chains. B) the broadcasting industry. C) college bookstores. D) aircraft manufacture.
Given Keynesian assumptions about the shape of the aggregate supply curve and an economy suffering a recession, which of the following is most likely to occur if the Fed pursues expansionary monetary policy?
A. The equilibrium price level and output will both increase until full employment is reached. B. The equilibrium price level and output will both decrease. C. The equilibrium price level will increase but output will stay the same. D. The equilibrium output will increase but the price level will stay the same until full employment is reached.
A monopoly misallocates resources when it
A. restricts output so that the marginal benefit of the last unit sold exceeds the marginal social cost of producing the good. B. exploits scale economies. C. makes an above-normal profit. D. sells the same product to different groups of customers at different prices.
In monopolistic competition, if a firm makes modest changes in its price or output, it will influence the market shares of other firms in the market.
Answer the following statement true (T) or false (F)