MACROECONOMICS W/CONNECT
18th Edition
ISBN: 9781307253092
Author: McConnell
Publisher: Mcgraw-Hill/Create
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Question
Chapter 11.7, Problem 3QQ
To determine
Inflationary expenditure gap.
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Students have asked these similar questions
According to the Keynesian framework, ____________ in _______________ may cause inflation, but not a recession.
a. decrease; interest rates
b. an increase; domestic spending
c. a decrease; a major trading partner's economy
d. a decrease; a mayor trading partner's export prices
I believe the correct answer is the increase in domestic spending because it will cause inflation but will shift AD to the right. What do you think?
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
Most 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 inputs
Chapter 11 Solutions
MACROECONOMICS W/CONNECT
Ch. 11.2 - Prob. 1QQCh. 11.2 - Prob. 2QQCh. 11.2 - Prob. 3QQCh. 11.2 - Prob. 4QQCh. 11.7 - Prob. 1QQCh. 11.7 - Prob. 2QQCh. 11.7 - Prob. 3QQCh. 11.7 - Prob. 4QQCh. 11 - Prob. 1DQCh. 11 - Prob. 2DQ
Ch. 11 - Prob. 3DQCh. 11 - Prob. 4DQCh. 11 - Prob. 5DQCh. 11 - Prob. 6DQCh. 11 - Prob. 7DQCh. 11 - Prob. 8DQCh. 11 - Prob. 1RQCh. 11 - Prob. 2RQCh. 11 - Prob. 3RQCh. 11 - Prob. 4RQCh. 11 - Prob. 5RQCh. 11 - Prob. 6RQCh. 11 - Prob. 7RQCh. 11 - Prob. 8RQCh. 11 - Prob. 9RQCh. 11 - Prob. 1PCh. 11 - Prob. 2PCh. 11 - Prob. 3PCh. 11 - Prob. 4PCh. 11 - Prob. 5PCh. 11 - Prob. 6PCh. 11 - Prob. 7PCh. 11 - Prob. 8PCh. 11 - Prob. 9PCh. 11 - Prob. 10P
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Similar questions
- 35 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; increasearrow_forwardAccording 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_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_forwardThe 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_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
- Refer 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_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_forwardWhen the economy goes into a recession. real GOP---- and unemployment ___ .a. rises, risesb. rises, fallsc falls. risesd. falls, fallsarrow_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_forwardThe horizontal segment of the Keynesian aggregate supply curve: A.depicts a negative relationship between real GDP and the price level. B.shows that real GDP can increase only by affecting the economy’s price level. C.depicts a positive relationship between real GDP and the price level. D.shows that real GDP can increase without affecting the economy’s price level.arrow_forward
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