Describe three types of short-run macroeconomic equilibrium
What will be an ideal response?
Short-run macroeconomic equilibrium occurs when the quantity of real GDP demanded equals the quantity of real GDP supplied. There are three types of short-run equilibrium: below full-employment equilibrium where a recessionary gap exists with real GDP less than potential GDP; above full-employment equilibrium where an inflationary gap exists with real GDP greater than potential GDP; full-employment equilibrium where no gap exists and real GDP equals potential GDP.
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________ is an illegal activity between buyers and sellers sometimes used to evade a price ceiling
A) Increased search activity B) A price floor C) Creating a shortage D) A black market
The recent flexible exchange rate system developed because of: a. the controversies generated by trade surplus nations wanting to devalue their currencies
b. the huge debts owed to the IMF by less-developed countries. c. governments were unable to agree on an alternative to a fixed-rate approach when the Bretton Woods system collapsed. d. the controversies generated by trade deficit nations wanting to raise the value of their currencies.
A person has a comparative advantage in an activity whenever she
A) has an absolute advantage in the activity. B) can perform the activity at a lower opportunity cost than can another person. C) can do the activity in less time than anyone else. D) can do everything better than anyone else.
Which of the following is a reason why trade and geography are linked?
A) There are high costs of locating in large urban areas. B) Many industries have no economies of scale. C) Competition means that all firms want to locate near each other. D) Some locations give access to pools of skilled labor or special resources.