Table 10-1
Aggregate Quantity
Aggregate Quantity
?
Demanded
Supplied
Price
(billions)
(billions)
Level
$3500
$2900
65
3400
3000
75
3350
3150
90
3250
3250
110
3100
3400
130
In Table 10-1, if full employment occurs at $3,400 billion, then
A. the economy experiences a recessionary gap of $75 billion.
B. the economy experiences a recessionary gap of $150 billion.
C. the economy experiences an inflationary gap of $75 billion.
D. the economy experiences an inflationary gap of $150 billion.
Answer: B
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If the price of crude oil falls, the equilibrium price of gasoline ________ and the equilibrium quantity ________
A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases
In the above figure, the inflationary gap when AD2 is the aggregate demand curve equals
A) the difference between 110 and 100. B) the difference between $16.5 trillion and $16.0 trillion. C) LAS minus SAS at a price level of 100. D) AD1.
In the above figure, if the firm is in monopolistic competition, its price will be
A) $1. B) $2. C) $3. D) $4.
What shape did the short-run aggregate supply curve have during the 1930s, according to Keynes? Explain
What will be an ideal response?