Suppose the economy operates at potential output, if the amount that businesses plan to invest is greater than the amount that consumers plan to save, then
A. there will be an inflationary gap.
B. there will be a recessionary gap.
C. equilibrium GDP will be less than aggregate investment.
D. the economy will experience inventory accumulation.
Answer: A
You might also like to view...
If a country has a comparative advantage in producing a product, it must also have an absolute advantage in producing that product
Indicate whether the statement is true or false
A country cannot develop without a large natural resource base
a. True b. False Indicate whether the statement is true or false
Consider the nations of India, Indonesia, and Japan. Over the past century, which of these three nations has experienced, by far, more rapid economic growth than the other two nations?
A firm is both hiring labor and selling output in purely competitive markets and is maximizing profits. It is currently operating in the elastic range of its MRP curve. If the wage rate increases, its total spending on wages at the new equilibrium will:
A. Be larger B. Be smaller C. Be unchanged D. Change in an undetermined direction