An inflationary gap exists when the macro economy is in equilibrium at more than the potential output of the economy because aggregate demand is so high that the economy is operating temporarily beyond its long-run capacity.In other words, the AD=AS occurs to the right of the vertical long-run supply curve.
Indicate whether the statement is true or false.
Answer: True.
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Equilibrium in a perfectly competitive market results in the greatest amount of economic surplus, or total benefit to society, from the production of a good
Why, then, did Joseph Schumpeter argue that an economy may benefit more from firms that have market power than from firms that are perfectly competitive?
When a firm produces output,
A) The value of the output produced is included in GDP B) The firm's output contributes to GDP only to the extent that there is value-added. C) The firm's output will not count as GDP if it is stored as inventory. D) The firm's output will not count as GDP if it is exported.
All of the following are examples of demand shocks, except one. Which is the exception?
a. A spontaneous decrease in money demand b. A tax increase c. A contraction of the money supply by the Fed d. An increase in the price level e. A reduction in government spending
Napoli National Bank has liabilities of $3 million and net worth of $200,000. Napoli National Bank's assets are
A. $200,000. B. $2.8 million C. $3.0 million. D. $3.2 million.