When an economy is experiencing a negative output gap, it means that the:
A. actual output is more than their potential output.
B. price level is falling.
C. price level is rising.
D. actual output is less than their potential output.
Answer: D
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Differentiate between principal and time value of money. John invests $100 in a bank for a year. At the end of the year he receives $125. What is the principal and time value of money in this case?
What will be an ideal response?
If the supply price on 100 acres is zero, then $30 for the next 100 acres, and finally $60 for the third 100 acres, the supply curve of land curve is
a. vertical at 100 acres b. a straight, upward-sloping curve starting at the origin c. horizontal at $30 (the average rent) d. upward-sloping and step-shaped e. U-shaped starting at $30 (the average rent)
Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
For which rate of inflation given below will the real interest rate be higher than the nominal interest rate?
a. –0.5% b. 0.2% c. 0.5% d. 1.5%