The GDP gap is:
a. the product of the potential real GDP and the equilibrium level of real GDP.
b. the distance between the current level of real gross domestic product and full employment real GDP.
c. the difference between potential real GDP and the equilibrium level of real GDP.
d. the difference between the present value of all of government's projected financial obligations and the present value of all projected future tax and other receipts.
e. the difference between the actual output of an economy and its potential output.
c
You might also like to view...
Refer to Table 21-2. Using the table above, what is the approximate growth rate of real GDP from 2015 to 2016?
A) -2% B) -1% C) 1% D) 2%
Long-term contracts are desirable for both firms and workers for each of the following reasons EXCEPT one. Which of the following does NOT explain the desirability of long-term contracts?
A) Wage negotiations are costly and time consuming on both sides. B) Contracts insulate workers from changing economic conditions such as decreases in aggregate demand. C) The incidence of strikes decreases because the contracts are binding for three years. D) Contracts reduce uncertainty.
The slope of the long-run aggregate supply curve is
A) positive. B) negative. C) zero. D) undefined.
Farmers can choose to produce eggs and/or milk. If there is a successful advertising campaign for people to "drink milk," then what will be the effect in the egg market?
a. None, since consumers do not see eggs and milk as related goods. b. Egg demand will increase. c. Egg demand will decrease. d. Egg supply will increase. e. Egg supply will decrease.