In the above figure, if the relevant aggregate demand curve is AD2, what type of gap exists and how large is it?
A. inflationary gap of $500 billion
B. recessionary gap of $1 trillion
C. recessionary gap of $500 billion
D. inflationary gap of $1 trillion
Answer: C
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Consider an industry that produces an output Q with marginal private cost (MC) and marginal social cost (MSC) as given in the table:
Q MC MSC 1 2 4 2 4 7 3 6 10 4 8 13 5 10 16 Which of the following is TRUE? A) The production of each additional unit results in a larger marginal external cost. B) The production of each additional unit results in the same marginal external cost. C) The production of each additional unit results in a lower marginal external cost. D) There are no marginal external costs associated with the production of this good.
Suppose the demand for tacos increases. Ceteris paribus, what will happen to producer surplus in the market for tacos?
What will be an ideal response?
Reducing protectionism allows greater gains from free trade.
Answer the following statement true (T) or false (F)
A game in which any gains one player makes are offset by equal losses by another player is known as a
A. zero-sum game. B. positive-sum game. C. negative-sum game. D. cooperative game.