Which of the following statements about the GDP gap is not true?
a. It widens during recessions and narrows down during expansions.
b. When an economy's GDP gap equals zero, it operates on its production possibilities curve.
c. It is a measure of output lost as a result of unemployment.
d. There are more goods and services available in an economy as its GDP gap widens.
e. It is equal to potential real GDP minus actual real GDP.
d
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Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Tom has a comparative advantage in ________ and Jerry has a comparative advantage in ________
A) cooking eggs; making sandwiches B) making sandwiches; cooking eggs C) neither of these activities; both activities D) both activities; neither of these activities
Suppose the supply of bicycles is price elastic. This means that
A) consumers will respond significantly to an increase in the quantity of bicycles supplied. B) suppliers will respond significantly to changes in the price of bicycles. C) suppliers face many substitutes for bicycles. D) suppliers will increase the quantity of bicycles supplied, but not immediately.