A recessionary gap

A. Would cause a depletion of inventories.
B. Is the amount by which the rate of actual spending falls short of full-employment GDP.
C. Would occur if total output were less than aggregate demand.
D. Is the amount by which total spending exceeds GDP.


Answer: B

Economics

You might also like to view...

In the long run ________

A) the amount of output an economy can produce is determined by real variables like capital, labor and technological advances B) aggregate supply is fixed at the potential level of output C) there is enough time for prices to fully adjust so the classical dichotomy holds D) all of the above E) none of the above

Economics

According to evidence provided by the U.S. government, the median black

a. man earns more than the median black woman. b. woman earns less than the median white woman c. man earns less than the median white man. d. All of the above are correct.

Economics

Assume a two-country, two-product model where the countries are A and B and the products are Y and Z. In the free trade equilibrium, the international price of good Z is less than the no trade price of good Z would be in Country A. Explain why, for Country A, Ricardo's comparative advantage model predicts full specialization, while the Heckscher-Ohlin model predicts only partial specialization in the production of two goods.

What will be an ideal response?

Economics

Which of the following is NOT part of Keynes's criticism of the classical theory of employment?

A. A reduction in wage rates will lead only to a reduction in total spending, not to an increase in employment. B. Investment spending is not very strongly influenced by the rate of interest. C. Prices and wages are simply not flexible downward in modern capitalistic economies. D. Saving in modern economies depends largely upon the level of disposable income and is little influenced by the rate of interest.

Economics