Consider the following statement: "Real GDP and potential GDP are always equal." Is this statement true or false? Explain your answer
What will be an ideal response?
Real GDP often differs from potential GDP. Real GDP equals potential GDP only when the economy is at full employment. However, the economy is not always at full employment. When employment is less than full employment, real GDP is less than potential GDP and the economy is in a recession. When employment exceeds full employment, real GDP exceeds potential GDP and the economy is in an expansion.
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For a monopolistically competitive firm, which of the following is ensured by product differentiation?
a. Long-run profit b. Market power c. Economies of scale d. Increasing returns to scale
Use the graph below to illustrate and explain what would happen in the labor market if a minimum wage was established at a level above the equilibrium wage
What will be an ideal response?