Which of the following if true would suggest that an expansionary gap exists in an economy?
What will be an ideal response?
An unemployment rate below its natural rate and an unexpected increase in the consumer price index
"When real GDP exceeds its potential, the unemployment rate is less than its natural rate. Output exceeding the economy's potential creates inflationary pressure."
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An example of a poverty trap is:
A. the malnourished not having enough energy to develop their economy. B. the uneducated not knowing how to further develop their economy. C. those who do not have basic immunizations not being healthy enough to develop their economy. D. All of these are examples of poverty traps.
Minimum-wage laws can keep wages
a. above equilibrium and cause a surplus of labor. b. above equilibrium and cause a shortage of labor. c. below equilibrium and cause a surplus of labor. d. below equilibrium and cause a shortage of labor.
Checkable deposits have decreased since the 1970's mainly because:
A. people prefer to use credit cards rather than writing checks. B. these deposit accounts offer little or no interest so depositors find them to be expensive. C. regulators allowed higher rates to be paid on these accounts and banks found them to be highly unprofitable. D. as banks added fees to these accounts people increased their holdings of currency.
Related to the Economics in Practice on page 292: The smart phone industry is best characterized as
A. an oligopoly. B. a monopoly. C. monopolistically competitive. D. purely competitive.