to the diagram, in which Q f is the full-employment output. If the economy's current aggregate demand curve is AD 3 , it is experiencing:
A. a positive GDP gap.
B. a negative GDP gap.
C. a recession.
D. cost-push inflation.
A. a positive GDP gap.
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In the contract theory of wages, if workers and firms agree to enter into contracts in which their money wage adjusts automatically to changes in the actual price level, then aggregate supply
a. slopes upward and to the right. b. shifts upward. c. is horizontal. d. is vertical.
The demand for good X has been estimated to be ln Qxd = 100 ? 2.5 ln PX + 4 ln PY + ln M. The own price elasticity of good X is:
A. ?2.5. B. 4.0 percent. C. 4.0. D. ?2.5 percent.
The marginal revenue that would be derived from production of the second unit would be
A. $20.
B. $18.
C. $16.
D. $14.
A firm suffering economic losses decides whether or not to produce in the short run on the basis of whether
A. revenues from operating are sufficient to cover fixed costs. B. revenues from operating are sufficient to cover fixed plus variable costs. C. revenues cover variable costs. D. Firms suffering economic losses will always shut down.