A recessionary gap exists when
A. real GDP exceeds nominal GDP.
B. nominal GDP exceeds real GDP.
C. real GDP exceeds potential GDP.
D. potential GDP exceeds real GDP.
Answer: D
You might also like to view...
Suppose we observe the following sequence of production and exchange: sand is used to make silicon; silicon is used to make silicon chips; silicon chips are used to make computers; computers are sold to retailers; retailers sell those computers to
consumers. Which represents the purchase of a final good? A) The retailer's purchase of computers B) The consumer's purchase of computers C) Both A and B above. D) None of the above.
Economic growth caused by increased employment creates a trade-off between income and
a. present-day living standards b. research and development expenditures c. investment in physical capital d. future living standards e. leisure time
Keynes believed that an increase in savings would:
A. raise aggregate demand by increasing consumption. B. raise aggregate demand by reducing investment. C. reduce aggregate demand by reducing investment. D. reduce aggregate demand by reducing consumption.
An economy in which output has decreased and prices have increased would suggest that there has been a:
A. negative demand side shock. B. negative supply side shock. C. positive demand side shock. D. positive supply side shock.