In the income-expenditure model, at equilibrium GDP
a. either unemployment or inflation may occur.
b. inflation can occur but unemployment cannot.
c. unemployment can occur but inflation cannot.
d. both unemployment and inflation are impossible.
a
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The money that households might hold either as money or in interest-bearing assets, depending on the interest rate, is called the:
a. precautionary demand. b. transactions demand. c. speculative demand. d. liquidity motive. e. investment motive.
Macland can produce 210 sweaters or 30 airplanes. Microland can produce 150 sweaters or 10 airplanes. Since Macland can produce more than Microland,
a. Macland will benefit from trading, but Microland will not as it does not have an absolute advantage. b. neither country will benefit from trade because Macland has an absolute advantage in both goods. c. both Macland and Macroland will benefit as the opportunity costs are different. d. Microland will benefit, but Macroland will not because it has an absolute advantage in both goods.