A inflationary gap occurs in the economy when
A) Aggregate demand is perfectly elastic.
B) Aggregate demand is greater than full employment output.
C) Aggregate demand is greater than potential GDP.
D) None of the above.
Answer: B
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If nominal GDP exceeds real GDP for a specific year, then the GDP deflator must be
A) greater than 100. B) less than 100. C) equal to 100. D) less than 0.
What is the profit maximizing (loss minimizing) quantity for the perfectly competitive firm to produce?
In an economic expansion, people used their charge cards to purchase many goods. Now the economy is in a recession and people must use much of their reduced incomes to pay back debts. If employees manufacturing the goods people used to buy are laid off, they will suffer from:
a. cyclical unemployment. b. structural unemployment. c. permanent unemployment. d. frictional unemployment. e. underemployment.
Compared to those with less economic freedom, countries with more economic freedom generally have ____ per capita GDP levels and ____ growth rates
a. lower; less rapid b. lower; more rapid c. higher; less rapid d. higher; more rapid