If aggregate expenditure in an economy equals 1,000 + 0.9Y and full employment real GDP equals 9,000, then this economy has
A. an inflationary gap.
B. no output gap.
C. a recessionary gap.
D. no autonomous expenditure.
Answer: A
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As wages and prices become more flexible ________
A) wages becomes less responsive to unemployment deviations from the natural rate B) it becomes easier to differentiate the short-run from the long-run Phillips curve C) inflation becomes more responsive to unemployment deviations from the natural rate D) all of the above E) none of the above
Fiscal policy is purposeful movements in ________ designed to direct an economy.
A. legal structures B. interest rates C. government regulations D. government spending and taxes
Profit-maximizing banks try to keep their excess reserves as high as possible.
a. true b. false
Describe the decision for a perfectly competitive employer in determining the profit maximizing quantity of labor to employ.
What will be an ideal response?