The inflationary gap is the
A. inflation rate that will occur from excess aggregate demand.
B. budget deficit that caused the inflation to occur.
C. distance between the equilibrium level of output and the full employment level of output.
D. gap between expected and actual inflation.
Answer: C
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A decrease in real GDP can
A) shift money demand to the right and increase the interest rate. B) shift money demand to the left and increase the interest rate. C) shift money demand to the right and decrease the interest rate. D) shift money demand to the left and decrease the interest rate.
A firm replaces a machine by hiring 3 hourly production workers instead. a. Both its fixed and variable costs will fall
b. Both its fixed and variable costs will rise. c. Its fixed costs will rise and its variable costs will fall. d. Its fixed costs will fall and its variable costs will rise.