The inflationary gap is the
A. inflation rate that will occur from excess aggregate demand.
B. budget deficit that caused the inflation to occur.
C. distance between the equilibrium level of output and the full employment level of output.
D. gap between expected and actual inflation.
Answer: C
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Real wages usually lag behind the increases in labor productivity.
Answer the following statement true (T) or false (F)
Suppose that a market is currently served by a single firm protected by high entry costs from any potential competition. Then imagine fixed entry costs gradually falling in a model where any competition will be with quantity as the strategic variable. Describe how you would expect output price to evolve as entry costs fall.
What will be an ideal response?
Which of the following is a fair bet based on the toss of an unbiased coin?
A) head: receive $5, tail: lose $5 B) head: receive $2, tail: lose $3 C) head: receive $0.5, tail: lose $1 D) head: lose $3, tail: lose $3
A monopolistic competitor will maximize its profits at the output level at which
A) TC = TR. B) MC = MR. C) the MC curve intersects the demand curve. D) MR = ATC.