Actual real GDP will be above potential GDP if
A) inflation is rising. B) firms are producing below capacity.
C) firms are producing at capacity. D) firms are producing above capacity.
D
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Expansionary fiscal policy would involve ________, whereas contractionary fiscal policy would involve ________
A) increasing the money supply; increasing personal income taxes B) increasing corporate income taxes; raising interest rates C) increasing transfer payments; increasing corporate income taxes D) increasing government purchases; increasing transfer payments
The purchasing power parity predicts that if the price level in the US falls relative to Mexico,
a. The dollar will appreciate relative to the peso b. The dollar will depreciate relative to the peso c. There is no effect on either currency d. PPP predicts price level will normalize in the long-run
In which statement(s) are "demand" and "quantity demanded" used correctly? (I) "An increase in the price of tea will reduce the quantity demanded of tea." (II) "An increase in the price of tea will reduce the demand for sugar used in tea."
a. in both statements I and II b. in statement I only c. in statement II only d. in neither statements I nor II
Assume a DVC has a real per capita output of $1,000 as compared to $20,000 for an IAC. If both nations realize a 4 percent growth of their real per capita outputs, after one year the absolute real per capita output gap will:
A. remain unchanged at $19,000. B. increase by $760. C. decrease by $1,000. D. increase by $19,760.