Using the aggregate expenditure-output model, assume the aggregate expenditures (AE) line is above the 45-degree line at full-employment GDP. This vertical distance is called a(n):
a. inflationary gap.
b. recessionary gap.
c. negative GDP gap.
d. marginal propensity to consume gap.
a
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An important problem with the gold standard was that
A) it was too complicated and restricted business activity. B) a country did not have control of its domestic monetary policy. C) exchange rates tended to fluctuate a great deal, making it difficult for businesses to make long-run plans. D) one country could easily manipulate the system to its advantage and the disadvantage of other countries.
Demand is more elastic
a. in the short run than in the long run b. for necessities than for luxuries c. for food than for hamburgers d. for goods with many substitutes than for goods with only a few e. for broadly defined goods than for narrowly defined ones
Two goods are perfect complements if the marginal rate of substitution between them is constant
a. True b. False Indicate whether the statement is true or false
Stricter environmental regulations and increased demand for energy have caused an increase in the demand for relatively clean natural gas. In the last several years, improved extraction technologies and new discoveries have increased the availability of natural gas. What has been the net effect on price and quantity for natural gas?
A. Quantity sold rose while the effect on price is ambiguous. B. Quantity sold fell and the effect on price is ambiguous. C. Quantity sold and price both rose with certainty. D. Quantity sold and price both fell with certainty.