If the expenditure schedule must be shifted downward to reach potential GDP, then the economy is experiencing a(n)
A. inflationary gap.
B. precautionary gap.
C. restrictive gap.
D. expansionary gap.
Answer: A
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Over the range of output for which the marginal product of labor curve is negatively sloped, the marginal cost curve is negatively sloped
Indicate whether the statement is true or false
Assume that the required reserve rate is ten percent, banks want to hold excess reserves in an amount that equals three percent of deposits, and the public withdraws ten percent of every deposit in cash. An open market purchase of $1 million by the Fed will see banking system deposits increase by:
A. more than $1 million but less than $10 million. B. more than $10 million but less than $20 million. C. less than $1 million. D. exactly $1 million.
Diana tutors Tiago for two hours before his economics final exam. Tiago pays Diana through a direct transfer from his bank on a payment app. Diana then uses her debit card to buy pizza for dinner from the local pizza parlor. This is an example of
a. the exchange of money facilitating production and trade b. trade between two people who each have a good or service that the other wants. c. an inefficient allocation of scarce resources. d. the creation of money through monetary policy.
Out of the three products, which product has a unitary elastic demand curve?
a. Cigarettes b. Alcohol c. Sodas d. None of the above