A recessionary gap occurs when ________ so that real GDP is ________ potential GDP

A) aggregate demand decreases; less than
B) aggregate supply decreases; less than
C) potential GDP decreases; greater than
D) aggregate demand increases; greater than
E) aggregate supply increases; less than


A

Economics

You might also like to view...

The IS model implies that a dollar of government spending has a larger impact on equilibrium output than does a dollar of taxes. Explain

What will be an ideal response?

Economics

Assume that Ford Motor Company engineers achieve a revolutionary technological breakthrough in the production process of automobiles. Which of the following is expected to take place?

a. A movement up along the existing supply curve for Ford automobiles b. The supply of Ford automobiles will remain unchanged c. An inward shift of the supply curve for Ford automobiles d. A downward movement along an existing supply curve for Ford automobiles e. An outward shift of the supply curve for Ford automobiles

Economics

International trade permits greater consumption than would be possible from the domestic production alone

a. True b. False Indicate whether the statement is true or false

Economics

Think of resources: The aggregate supply curve will shift to the right when the

a. quantity of labor in the society decreases b. capital stock in the economy shrinks c. quantity of natural resources in the society gets smaller d. quantity of labor in the economy increases e. price level in the economy rises

Economics