Suppose the economy's short-run equilibrium is at a point to the right of Natural Real GDP. Which of the following statements is true?
A) The economy is in an inflationary gap.
B) The economy is in a recessionary gap.
C) The economy is in long-run equilibrium.
D) This situation is actually impossible.
A
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Any improvement in overall production technology that permits more output to be produced with the same level of inputs causes
A) a movement up the supply curve resulting in both a higher equilibrium price and quantity. B) a rightward shift of the supply curve so that more is offered at each price. C) no movement of the supply curve, but a fall in price and a decrease in quantity supplied. D) a leftward shift of the supply curve so that less is offered for sale at each price.
If more foreign auto plants relocate to the United States, we would expect
A) the U.S. supply curve for automobiles to shift to the right. B) the U.S. supply curve for automobiles would shift to the left. C) that the U.S. auto market would not respond. D) that U.S. auto demand might change, but U.S. auto supply would remain static.