Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
20th Edition
ISBN: 9780078021756
Author: McConnell, Campbell R.; Brue, Stanley L.; Flynn Dr., Sean Masaki
Publisher: McGraw-Hill Education
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Question
Chapter 29.7, Problem 3QQ
To determine
Inflationary expenditure gap.
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Students have asked these similar questions
An inflationary gap occurs when: *
a. we need to increase prices
b. real output is too low.
c. potential output exceeds actual output.
d. actual output exceeds potential output.
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When a recessionary gap exists, actual output______ potential output and the rate of inflation will tend to ____.
a. is less than; decrease
b. is less than; increase
c. exceeds; decrease
d.equals; remain the same
e.exceeds; increase
In the simple Keynesian framework, the price level ___ in the short run.
A.is fixed
B.is indeterminate
C.varies directly with unemployment
D.varies inversely with wages
Chapter 29 Solutions
Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
Ch. 29.2 - Prob. 1QQCh. 29.2 - Prob. 2QQCh. 29.2 - Prob. 3QQCh. 29.2 - Prob. 4QQCh. 29.7 - Prob. 1QQCh. 29.7 - Prob. 2QQCh. 29.7 - Prob. 3QQCh. 29.7 - Prob. 4QQCh. 29 - Prob. 1DQCh. 29 - Prob. 2DQ
Ch. 29 - Prob. 3DQCh. 29 - Prob. 4DQCh. 29 - Prob. 5DQCh. 29 - Prob. 6DQCh. 29 - Prob. 7DQCh. 29 - Prob. 8DQCh. 29 - Prob. 1RQCh. 29 - Prob. 2RQCh. 29 - Prob. 3RQCh. 29 - Prob. 4RQCh. 29 - Prob. 5RQCh. 29 - Prob. 6RQCh. 29 - Prob. 7RQCh. 29 - Prob. 8RQCh. 29 - Prob. 9RQCh. 29 - Prob. 1PCh. 29 - Prob. 2PCh. 29 - Prob. 3PCh. 29 - Prob. 4PCh. 29 - Prob. 5PCh. 29 - Prob. 6PCh. 29 - Prob. 7PCh. 29 - Prob. 8PCh. 29 - Prob. 9PCh. 29 - Prob. 10P
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- According to the Keynesian framework, ___________ may cause a recession, but not inflation a. a decrease in interest rates b.a decrease in a major trading partners export prices c. a major trading partner's economic slowdown d. an increase in domestic investmentarrow_forwardWhat is inflationary gap? Select one: When aggregate expenditures are greater than the full employment level causing a demand pull-inflation When aggregate expenditures are greater than full employment level causing cost push inflation None of the options are correct It is the gap between a developed nation GDP and an under-developed/ developing nation GDP When aggregate expenditures are inadequate to bring about a full employment levelarrow_forwardMost economists reason that an economy adjusts to inflationary and recessionary gaps slowly because are fixed in the short run. Consumer preferences Тахes Wages Supplies of most of the inputsarrow_forward
- Which of the following is most commonly used to monitor short-run changes in economic activity?a. the inflation rateb. real GDPc. aggregate demandd. aggregate supplyarrow_forwardVII. Assume that the economy starts at the natural level of output. Now suppose there is a decline in business confidence, so that investment demand falls for any interest rate. a. In an AD-AS diagram, show what happens to output and the price level in the short run and the medium run. b. What happens to the unemployment rate in the short run and in the medium run?arrow_forwardRefer to the figure at right. If the economy is currently operating at point C, then there is A. unemployment. B. a recessionary gap. C. deflation. D. an inflationary gap.arrow_forward
- The school of thought that emphasizes the natural tendency for an economy to move toward a full-employment equilibrium is known as thea. Keynesian school.b. supply-side school.c. noninterventionist school.d. classical school.arrow_forwardWhen the economy goes into a recession. real GOP---- and unemployment ___ .a. rises, risesb. rises, fallsc falls. risesd. falls, fallsarrow_forwardStructural unemployment issue will remain there under a. Keynesian zone of aggregate supply b. Keynesian zone of aggregate demand c. Intermediate zone of aggregate supply d. Neoclassical zone of Aggregate supplyarrow_forward
- For this economy to produce Y1 and sustain it without inflationa) the price of oil must increase.b) the government must implement an expansionary fiscal policy.c) the government must implement an expansionary monetary policy.d) potential output must increase.arrow_forwardThe structural unemployment rate is 1.3 percent, the frictional unemployment rate is 2.1 percent, and the economy's current unemployment rate is 3.5 percent. The economy is: A.in an inflationary gap producing more than the potential real GDP. B.n a recessionary gap producing less than the potential real GDP. C.in a long run equilibrium. D.in an inflationary gap producing the potential real GDP.arrow_forwardExplain business response towards recessionary pressures in the economy.arrow_forward
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