If the economy is at full level then
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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
The Keynesian short-run aggregate supply curve is horizontal because:
a. it represents the full employment level of real GDP.
b. it represents the full employment level of nominal GDP.
c. it represents unemployment and unused capacity in the economy.
d. it represents the position where the economy is operating beyond full employment level.
If cyclical unemployment is eliminated in the economy, then
A) the economy is at less than full employment.
B) the unemployment rate is above the natural rate of unemployment.
C) the economy is considered to be at full employment.
D) the unemployment rate is below the natural rate of unemployment.