Refer to the graph shown. The economy begins at a level of output of $50 billion and experiences a one-year recession in which output declines by 3 percent. By what rate must the economy expand to return to potential output by year 2?
A. About 3 percent
B. About 9 percent
C. About 6 percent
D. About 4 percent
Answer: B
You might also like to view...
Starting from a situation of full employment, an increase in aggregate demand creates ________ and ________ the price level
A) an inflationary gap; raises B) a recessionary gap; lowers C) a recessionary gap; raises D) a recessionary gap; does not change E) an inflationary gap; lowers
If a person is taxed $100 on an income of $1,000 . taxed $180 on an income of $2,000 . and taxed $220 on an income of $3,000 . this person is paying a:
a. progressive tax. b. poll tax. c. proportional tax. d. regressive tax. e. retro tax.
Market failure occurs when: a. the stock markets tumble due to heavy selling
b. the market economy fails to allocate resources efficiently. c. demand shows signs of slowing down. d. a country cannot produce a particular good or service at a lower opportunity cost than other countries.
The reason a profit-maximizing natural monopolist cannot set price equal to marginal cost is that it would:
A. then be forced to produce more than it could sell. B. suffer losses since price would be less than average cost. C. earn excessive profits, which would attract new firms into the market. D. then be forced to produce more than the socially optimal level of output.