Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Question
Chapter 20.A, Problem 15SQ
To determine
The implication of the intersection of SRAS2 and LRAS.
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Deflation is particularly bad for an economy in recession for all of the following reasons EXCEPT
a-with deflation people spend less expecting prices to be lower in the future
b- the rising prices makes goods more expensive
c- with deflation the value of assets declines while the value of loans does not - this lowers wealth and further depresses spending
When Full employment GDP is less than equilibrium GDP, the economy faces
A) Recession
B) Inflation
C) Cannot be determined
D) unemployment
When an economy is operating in a positive output gap (Inflationary Gap) which of the following must be true?
a. Unemployment is less than full employment
b. Employment is less than full employment
c. Employment is equal to full employment
d. Unemployment is greater than the Natural rate of Unemployment
Chapter 20 Solutions
Economics For Today
Ch. 20.7 - Prob. 1YTECh. 20.A - Prob. 1SQPCh. 20.A - Prob. 2SQPCh. 20.A - Prob. 3SQPCh. 20.A - Prob. 4SQPCh. 20.A - Prob. 5SQPCh. 20.A - Prob. 6SQPCh. 20.A - Prob. 1SQCh. 20.A - Prob. 2SQCh. 20.A - Prob. 3SQ
Ch. 20.A - Prob. 4SQCh. 20.A - Prob. 5SQCh. 20.A - Prob. 6SQCh. 20.A - Prob. 7SQCh. 20.A - Prob. 8SQCh. 20.A - Prob. 9SQCh. 20.A - Prob. 10SQCh. 20.A - Prob. 11SQCh. 20.A - Prob. 12SQCh. 20.A - Prob. 13SQCh. 20.A - Prob. 14SQCh. 20.A - Prob. 15SQCh. 20.A - Prob. 16SQCh. 20.A - Prob. 17SQCh. 20.A - Prob. 18SQCh. 20.A - Prob. 19SQCh. 20.A - Prob. 20SQCh. 20 - Prob. 1SQPCh. 20 - Prob. 2SQPCh. 20 - Prob. 3SQPCh. 20 - Prob. 4SQPCh. 20 - Prob. 5SQPCh. 20 - Prob. 6SQPCh. 20 - Prob. 7SQPCh. 20 - Prob. 8SQPCh. 20 - Prob. 9SQPCh. 20 - Prob. 10SQPCh. 20 - Prob. 11SQPCh. 20 - Prob. 1SQCh. 20 - Prob. 2SQCh. 20 - Prob. 3SQCh. 20 - Prob. 4SQCh. 20 - Prob. 5SQCh. 20 - Prob. 6SQCh. 20 - Prob. 7SQCh. 20 - Prob. 8SQCh. 20 - Prob. 9SQCh. 20 - Prob. 10SQCh. 20 - Prob. 11SQCh. 20 - Prob. 12SQCh. 20 - Prob. 13SQCh. 20 - Prob. 14SQCh. 20 - Prob. 15SQCh. 20 - Prob. 16SQCh. 20 - Prob. 17SQCh. 20 - Prob. 18SQCh. 20 - Prob. 19SQCh. 20 - Prob. 20SQ
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Similar questions
- The trough of the business cycle: O is a temporary maximum level of real GDP. comes before the recession phase. comes right after the expansion phase. is a temporary minimum level of real GDP.arrow_forwardIf Full employment GDP is greater than equilibrium GDP, the economy is facing A) Recession B) Inflation C) Stagflation D) None of the Abovearrow_forwardA movement along the economy's AS curve could be caused by a change in technology. the price level, caused in turn by an AD shock. the wage rate. labour productivity. the cost of capitalarrow_forward
- Exhibit: Economic Adjustments if the economy is at point a, Group of answer choices employment is greater than the natural level of employment, it is at the natural level of employment, it is in a recessionary gap, the unemployment rate is negative. S₁ S: Interest rate 6 4 Q₁ Q₂ D Quantity of money per periodarrow_forwardSuppose real GDP in the country of Quarterville is currently $478075 and potential GDP is $430854. Which phase of the business cycle is Quarterville's economy most likely in? ORecession/Trough OExpansion/Peakarrow_forwardA number of macroeconomic variables decline during recessions. One of these variables is the GDP. What other variables, besides real GDP, tend to decline during recessions? Given the definition of real GDP and its components, explain the declines in these economic variables which are to be expected. Empirical studies indicate that the long-run trend in real GDP of the USA has an upward trend. How is this possible given business cycles and macroeconomic fluctuations? What factors explain the upward trend in spite of the cycles?arrow_forward
- When an economy is operating in a negative output gap (Recessionary Gap) which of the following must be true? a. Unemployment is less than full employment b. Employment is greater than full employment c. Employment is equal to Natural rate of unemployment d. Unemployment is greather than the Natural rate of Unemployment.arrow_forward(26) Assume that the AD curve intersects the AS curve in the Neoclassical Region and that the government increases government spending. What happens to the level of unemployment? Group of answer choices (A) It stays the same. (B) It goes up. (C) It goes down.arrow_forwardEvaluate (explain the positives and negatives of) contractions in the economy. What is happening with GDP at this point? (increasing or decreasing) What is happening with unemployment at this point? (increasing or decreasing) What is happening with Inflation at this point? (increasing or decreasing)arrow_forward
- Which of the following economic environments would most likely be associated with a recession? Unemployment falling to 30-year low Unemployment increasing from 5% to 9% during the year New businesses opening in record numbers while new housing starts reach a 10-year high GDP growing at an annual rate of 4.2%arrow_forwardResume later Submil In an economy, the working-ago population is 200 million Of this total, 160 million workers are employed. 6 million workers are unemployed. 28 million workers are not available for work (homemakers, full-time students, etc.). 4 million workers are available for work but are discouraged and thus are not seeking work 2 million workers are available for work but are not currently seeking work due to transportation or childcare problems. The unemployment rate in this economy is %. (Round your answer to one decimal place.)arrow_forwardFrictional unemployment may exist under full employment level. True/Falsearrow_forward
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