If the full-employment level of income in Figure 9.7 is $200 billion, there is
A. A recessionary gap of $100 billion per year.
B. An inflationary gap of $100 billion per year.
C. A recessionary gap of $200 billion per year.
D. Achievement of macro equilibrium.
Answer: D
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The value (purchasing power) of each unit of money
a. is largely independent of the money supply. b. tends to increase as the money supply expands. c. increases as prices rise. d. tends to decline as the money supply expands in relation to the availability of goods and services.
Considering perfect competition, monopolistic competition, and monopoly, which of the market structures can have positive profits in the short run?
Assume the price of a product rises from $2 to $3 and the quantity demanded of the product decreases from 600 to 400. The price elasticity of demand coefficient, using the midpoint formula, is:
A. 2.10. B. 0.40. C. 1.60. D. 1.00.
Assume the production of a good gives rise to external benefits. The government may increase efficiency by
A. requiring all producers of the good to be licensed. B. subsidizing consumption of the good. C. imposing taxes on the good. D. taxing production of the good.