Using Figure 9.9, and assuming the full-employment output level is $50 billion,
A. There is a recessionary gap of $50 billion income.
B. The economy is at macro equilibrium.
C. There is an inflationary gap of $25 billion income.
D. There is an inflationary gap of $50 billion income.
Answer: C
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If a firm's minimum efficient scale is relatively small compared to industry output, then only a few firms are needed to satisfy industry demand
Indicate whether the statement is true or false
The farmers in Country A harvest and sell 150 tons of rice at the price of $80 per ton. Of the total produced, 30 tons are exported. If the government bans all exports of rice, the domestic price of rice would drop to $60. But the production and sales would also drop to 120 tons. How much loss would the domestic farmers incur due to the export ban? Use a graph to illustrate your answer.
What will be an ideal response?