HomeworkLib
Question

Inflationary and recessionary gaps are always eliminated automatically through changes in aggregate demand.

Inflationary and recessionary gaps are always eliminated automatically through changes in aggregate demand.
business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

False.

Government intervention is needed to recover the inflationary and recessionary gaps in the economy. It is not always eliminated automatically through changes in aggregate demand. Recessionary gap is eliminated through expansionary fiscal [policy of the government and inflationary gap is eliminated through contractionary fiscal policy of the government.

0 0
Add a comment
Know the answer?
Add Answer to:
Inflationary and recessionary gaps are always eliminated automatically through changes in aggregate demand.
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 2. Draw and properly label the AD-AS graph(s) to show recessionary and inflationary     gaps (6%)....

    2. Draw and properly label the AD-AS graph(s) to show recessionary and inflationary     gaps (6%). Then, discuss Keynesian perspective to closing recessionary and     inflationary gaps. 3. Draw and properly label AD-AS graph(s) to show recessionary and inflationary gaps     (6%). Then, discuss neoclassical perspective to closing recessionary and     inflationary gaps.

  • Describe the impact of inflationary and recessionary gaps and the lump sum tax on the domestic...

    Describe the impact of inflationary and recessionary gaps and the lump sum tax on the domestic economy.

  • What are 1) an inflationary gap and 2) a recessionary gap? What are the meanings of...

    What are 1) an inflationary gap and 2) a recessionary gap? What are the meanings of inflation and deflation and how are they affected by aggregate demand and aggregate supply? Define aggregate supply and aggregate demand. What is the difference in appreciation of the dollar and inflation?

  • ()​-run equilibrium occurs at the intersection of the aggregate demand​ curve, ​AD, and the​ short-run aggregate...

    ()​-run equilibrium occurs at the intersection of the aggregate demand​ curve, ​AD, and the​ short-run aggregate supply​ curve, SRAS.() ▼ Long Short ​-run equilibrium occurs at the intersection of AD and the​ long-run aggregate supply​ curve, LRAS. Any unanticipated shifts in aggregate demand or supply are called aggregate demand or aggregate supply() ▼ shocks externalities . When aggregate demand decreases while aggregate supply is​ stable,() ▼ a recessionary an inflationary gap can​ occur, defined as the difference between how much...

  • If the aggregate demand (AD) curve and the aggregate supply (AS)

    If the aggregate demand (AD) curve and the aggregate supply (AS) curve intersects at the level of real GDP less than potential GDP, there is a recessionary gap  an above full-employment equilibrium an inflationary gap  a falling real GDP

  • Which of the following is not determined in the aggregate demand (AD) and aggregate supply (AS)...

    Which of the following is not determined in the aggregate demand (AD) and aggregate supply (AS) model? output/income/employment real interest rates the price level recessionary or inflationary gaps real GDP Question 5 (2.5 points) Saved To an economist, which of the following is an example of a (physical) investment? expenditures made on government bonds purchases of new physical assets, such as new plant and equipment, by firms the supply of loanable funds the purchase of an IBM stock by a...

  • The table shows Aggregate Demand and Short-run Aggregate Supply for a country in which Potential GDP...

    The table shows Aggregate Demand and Short-run Aggregate Supply for a country in which Potential GDP is $1,050 billion Price Level Real GDP Demanded Real GDP Supplied 100 $1,150 $1,050 110 $1,100 $1,100 120 $1,050 $1,150 130 $1,000 $1,200 140 $950 $1,250 150 $900 $1,300 160 $850 $1,350 Graph the Aggregate Demand and Short-run Aggregate Supply curves Does this country have an inflationary gap or a recessionary gap? What is the magnitude of the gap as a % of Potential...

  • Suppose that the economy is in long-run macroeconomic equilibrium, experiencing full employment, when the Aggregate Demand...

    Suppose that the economy is in long-run macroeconomic equilibrium, experiencing full employment, when the Aggregate Demand Curve shifts to the right. In the short run, the economy experiences a(n) ___________ gap with _______________. inflationary; low unemployment recessionary; low inflation recessionary; high inflation inflationary; high unemployment

  • The following table shows the initial level of aggregate demand (AD) and te supply (AS) for the economy of Adanac.

    The following table shows the initial level of aggregate demand (AD) and te supply (AS) for the economy of Adanac. The full-employment level of output is $500 billion.  a. Draw the corresponding initial aggregate demand and aggregate supply curve (AD0 and AS0). b. What is the initial equilibrium price level and level of real GDP?  c. At this initial equilibrium (AD0 and AS0), is Adanac experiencing either a recessionary or inflationary gap? If so, how large a gap exists? d. Suppose the aggregate demand in...

  • DOCX Econ 20 Chapter...we Name ECON 2105 Extra Credit #4 25 points 1. Draw graphs using aggregate supply and aggreg...

    DOCX Econ 20 Chapter...we Name ECON 2105 Extra Credit #4 25 points 1. Draw graphs using aggregate supply and aggregate demand to show macroeconomic recession and inflation. You need to show demand side inflation and recession as well as supply side inflation and recession. Be sure to label the inflationary gap and recessionary gaps as well as the price level and GDP. GDP Work #6 Doc Workshe Growt

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT