A recessionary GDP gap is the
A. Difference between leakages and injections.
B. Sum of leakages and injections.
C. Same as an inflationary gap.
D. Horizontal distance between full-employment GDP and equilibrium GDP.
Answer: D
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Assume that firms in a perfectly competitive market are earning economic profits. Which of the following statements describes the change in market price and output as a result of the entry of new firms into this market?
A) The short-run market supply curve shifts to the right, causing price to fall and total market output to increase. B) The short-run market supply curve shifts to the left, causing price to rise and total market output to decrease. C) The market demand curve shifts to the left, causing price to fall and market output to decrease. D) The market demand curve shifts to the right, causing price to rise and market output to increase.
Which of the following is true?
A) National income = Consumption - Savings + Taxes B) National income = Consumption + Savings + Taxes C) National income = Consumption + Savings - Taxes D) National income = Consumption - Savings - Taxes