A recessionary gap occurs when
A. the short-run equilibrium level of real GDP is less than the level consistent with the long-run aggregate supply curve.
B. the short-run equilibrium level of real GDP is greater than the level consistent with the long-run aggregate supply curve.
C. short-run aggregate supply falls, but other things remain constant.
D. aggregate demand rises, but other things remain constant.
Answer: A
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All else equal, if the risk associated with U.S. stocks is perceived to have fallen compared to financial assets in other countries, then the market equilibrium value of the exchange rate for the U.S. dollar will:
A. rise. B. be equal to the value chosen by the Federal Reserve. C. become fixed. D. fall.
When the supply of real loanable funds is upward-sloping and the demand for real loanable funds rises, complete crowding-out:
a. Occurs because private demand falls by the same amount that government borrowing rises. b. Does not occur because taxes rise with the increase in real GDP. c. Does not occur because new funds are supplied to the Real Loanable Funds Market as the real, risk-free interest rate rises. d. Occurs because private borrowers will increase the amount their loans as the real risk-free interest rate rises.
If the dollar appreciates and the U.S. AD curve shifts _______________ by an amount less than the U.S. SRAS curve shifts __________________, then Real GDP will _________________________
A) rightward; leftward; increase B) rightward; leftward; decrease C) leftward; rightward; increase D) leftward; rightward; decrease
Exhibit 4-8 Demand and supply curves
In Exhibit 4-8, a movement from A to D is best described as a(n):
A. increase in the quantity demanded and an increase in supply. B. increase in supply and demand. C. increase in both the quantity demanded and supplied. D. increase in the quantity supplied and in the demand.