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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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?
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