The table below shows data for India's economy. Real GDP is measured in millions of rupees. Suppose that full employment occurs when real GDP is 27,000 million rupees
Price level Real GDP
supplied in the short run Real GDP demanded
a 114 23,501 35,898
b 120 25,355 32,341
c 125 27,670 27,670
d 131 30,366 18,569
e 138 33,164 15,898
The economy is experiencing ________ gap and firms will ________.
A) an inflationary gap; increase production
B) an inflationary gap; increase money wages paid to workers
C) a recessionary gap; increase production
D) a recessionary gap; decrease money wages paid to workers
B
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If the money wage rate is constant and the price level increases, what happens to the real wage rate, firms' profits, and the aggregate quantity supplied?
What will be an ideal response?
How does inclusion of the current revenues and expenditures of the Social Security trust fund into the budget calculation affect the reported budget deficit of the federal government when the trust fund experiences a surplus?
A. It increases the reported deficit. B. It reduces the reported deficit. C. It exerts no effect on the reported deficit. D. It increases the deficit during an economic boom but reduces it during a recession.