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According to Keynes, can the private sector always remove the economy frindividividual and companies will cut back on om a recessionary gap? Explain your answer.

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manhokwe tawanda
manhokwe tawandaLv10
6 Jan 2021

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Related questions

If a recessionary gap were to appear, how might the economy adjust?

Can/should we rely on it to adjust itself? Is it possible that the economy will never adjust to a gap, and things will just get worse and worse?

a. Suppose the economy is operating at its full employment level output. Does it mean that the unemployment rate is ZERO? Explain.

b. What is the difference between a recessionary gap and an inflationary gap? Explain

c. If the actual economy is operating below its full-employment long run equilibrium, then an inflationary gap will develop. If your answer yes, explain. If your answer is no, explain

1. As prices fall, the value of people's existing assets rises and people increase expenditures. This occurs as a result of the:

a. international effect.

b. interest rate effect.

c. money wealth effect.

d. multiplier effect.

 

2. An increase in aggregate demand, in the long run, will change:

a. both output and the price level.

b. neither output nor the price level.

c. the price level but not output.

d. output but not the price level.

 

3. A change in which of the following will shift the long-run aggregate supply curve?

a. The price level

b. Aggregate demand

c. Available resources

d. Sales or excise taxes

 

4. If potential output exceeds actual output, the economy:

a. is experiencing a recessionary gap.

b. is in neither a short-run nor long-run equilibrium.

c. may be in a long-run equilibrium but is not in short-run equilibrium.

d. is experiencing an inflationary gap.

 

5. Keynes believed the economy was:

a. always moving toward potential income.

b. always at potential income.

c. always moving away from potential income.

d. fluctuating around potential income.

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