Using the aggregate expenditure-output model, assume the aggregate expenditures (AE) line is above the 45-degree line at full-employment GDP. This vertical distance is called a(n):
a. inflationary gap.
b. recessionary gap.
c. negative GDP gap.
d. marginal propensity to consume gap.
a
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In the figure above, if the firm is regulated using an average cost pricing rule, the deadweight loss created is equal to the area of
A) ABG. B) BEFG. C) BCFG. D) BCE. E) None of the above because there is no deadweight loss created.
The president is told that an inflationary gap must be closed but that consumers are increasing their spending on consumption and producers increasing their demand for investment goods. If the gap is to be closed, the President must
a. rely on reducing the price level b. resort to creating a deficit budget c. increase aggregate demand d. rely on increasing the price level e. resort to creating a surplus budget
What percentage of federal spending was financed by borrowing during 2009-2010?
a. approximately 10 percent b. approximately 20 percent c. approximately 40 percent d. more than 50 percent
why do foreigners export goods and services to buyers in the United States?
What will be an ideal response?