A recessionary gap means that the level of real GDP at the short-run macroeconomic equilibrium
A) is less than full-employment GDP.
B) equals full-employment GDP.
C) is more than full-employment GDP.
D) may be less than, more than, or the same as full-employment GDP depending on the level of potential GDP.
A
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Refer to the above figure. Suppose the economy's initial equilibrium is represented by the intersection of LRAS1 and AD1
Suppose there is a persistent reduction in labor force participation, which reduces total planned production at any given price level. The resulting change in the economy's long-run equilibrium position would be represented by a A) movement from B to C. B) movement from C to A. C) movement from A to B. D) movement from A to C.
The marginal productivity theory of income distribution holds that ______.
a. the most productive employees increase income by maximizing the substitution effect b. owners of the means of production receive higher payments than workers or land owners c. labor, land, and capital owners are all paid for the value of their contribution to output d. union workers will receive higher wages than nonunion workers for comparable labor
The classical economists believed
A. wages and prices were inflexible downward. B. if nothing was done, recessions would become depressions. C. recessions needed quick countercyclical action by the government. D. the economy was essentially self-regulating.
If Mexico experiences a period of stable prices while the United States experiences rapid inflation, what will happen in the United States?
A. An increase in U.S. imports B. An increase in U.S. exports C. A decrease in U.S. imports D. An increase in U.S. net exports