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A recessionary output gap implies that

A) the intersection of AD and AS occurs where real GDP exceeds potential output.

B) the economy’s resources are being used at more than their normal capacity.

C) the demand for all factor services will be relatively low.

D) there is upward pressure on wages.

E) none of the above.

 

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Chika Ilonah
Chika IlonahLv10
8 Oct 2020

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Related questions

The economy is in equilibrium, TP = TE, and Real GDP is $4,555 billion. The MPC is 0.80, the multiplier is operative, and idle resources exist at each expenditure round. Government purchases rise by $10 billion. As a result, the __________ curve shifts __________, inventory levels unexpectedly __________, business firms ___________ the quantity of goods and services they produce, and Real GDP __________ by __________.

a.

TE; downward; fall; increase; rises; $10 billion.
b.

TP; rightward; fall; decrease; falls; $50 billion
c.

TE; upward; fall; increase; rises; $50 billion
d.

TE; downward; rise; increase; rises, $50 billion

Bank A has checkable deposits of $900,000 and total reserves of $112,000. If the required reserve ratio is 8 percent, the bank has excess reserves of

a.

$40,000.
b.

$72,000.
c.

$13,440.
d.

$4,000

A tariff is imposed on strawberries. The tariff will ___________ the price of strawberries in the domestic market, _____________ the quantity of strawberries imported in the domestic market, and ____________ consumers’ surplus.

a.

raise; lower; lower
b.

lower; raise; lower
c.

raise; lower; raise
d.

lower; lower; raise

The economy is in a recessionary gap, wages are inflexible downward, and there is complete crowding out. Which of the following is consistent with this state of affairs?

a.

The economy will soon self-regulate and produce Natural Real GDP.
b.

Expansionary fiscal policy will be effective at removing the economy from the recessionary gap.
c.

If expansionary fiscal policy is implemented, the AD curve will shift to the right, and eventually the price level and Real GDP will rise.
d.

b and c
e.

none of the above

When Bank A obtains a loan from the Fed, the

a.

discount rate is probably higher than the federal funds rate.
b.

bank’s reserves increase.
c.

simple deposit multiplier decreases.
d.

b and c
e.

none of the above

1.

John just bought shares of stock in IBM for $10,000 and paid a $90commission to his broker. How did this affect GDP?

A) It had no impact on GDP.

B) GDP increased by $90.

C) GDP increased by $10,000.

D) GDP increased by $9,990.

E) GDP increased by $10,090.

2.

Opportunity cost is the ____ alternative forfeited when a choice ismade.

A) least-valued

B) most highly-valued

C) most convenient

D) most recently considered

3.

If there is an increase in the amount of good B foregone as everyadditional unit of good A is produced, the PPF between A and Bwould

A) be a straight line.

B) be a bowed-outward curve.

C) be a bowed-inward curve.

D) not exist.

4.

Persons who are retired or engaged in own-home housework areconsidered to be in which of the following categories?

A) in the civilian labor force

B) not in the labor force

C) employed

D) unemployed

5.

A recessionary gap exists if (actual) Real GDP is ____ Natural RealGDP.

A) less than

B) greater than

C) equal to

D) b and c

E) none of the above

6.

Decision making "at the margin" means making a choice based on ____of a decision.

A) the total benefits

B) the total costs

C) comparing the total benefits and costs

D) comparing the additional benefits and costs

7.

When Claudia trades $100 for good X, economists assume that sheis

A) trading something of less value to her for something of morevalue to her.

B) trading something of more value to her for something of lessvalue to her.

C) trading something that gives her less utility for something thatgives her more utility.

D) a and c

E) none of the above

8.

An increase in investment at a given price level

A) shifts the AD curve to the right.

B) shifts the AD curve to the left.

C) causes an upward movement along the existing AD curve.

D) causes a downward movement along the existing AD curve.

E) none of the above

9.

If the demand for a good falls by less than the supply of the goodrises, then equilibrium price will ____ and equilibrium quantitywill ____.

A) rise; fall

B) rise; rise

C) fall; fall

D) fall; rise

10.

The CPI was 140 in one year and 144 the following year.Approximately how much did prices rise between the two years?

A) 2.86 percent

B) 2.78 percent

C) 0.03 percent

D) 1.03 percent

E) none of the above

Part 1.Choose the correct answer of the following:

1.In a market economy, economic activity is guided by

a.Self-interest and prices

b.The government.

c.Corporations.

d. Central planners.

2. Which of the following decisions must be made by all economies?

a.How much to produce? When to produce? How much does it cost?

b.What to produce? How to produce? For whom to produce?

c.What is the price? Who will produce it? Who will consume it?

d. None of the above

3.Since the resources used in the production of goods and services are limited, society must:

a.Reduce the use of those resources

b.Try to get more resources

c.Make choices about how to use resources

d.Focus on their most abundant resource

4.Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?

a.Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes.

b.There is no such thing as a free lunch.

c.People buy more when prices are low than when prices are high.

d. No matter how much people earn, they tend to spend more than they earn.

5.If real GDP increased by 2 percent, then

a.Government spending increased by 2 percent

b.The price level has increased by 2 percent

c.Real output/production has increased by 2 percent

d. The increase might have been caused by an increase in the price level or output, but we cannot tell for sure

6. Which of the following would show an efficient economy?

a.Uses the least costly amount of resources available

b.Has a small amount of people who do not work

c.Resources are used to make the most goods and services possible

d.None of the above

7.What is the type of unemployment that occurs when people take time to find a job?

a.cyclical

b.frictional

c.Disguised

d.structural

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