The potential GDP line is a ________ on the Keynesian Cross diagram which indicates GDP at its
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Question:
The potential GDP line is a ________ on the Keynesian Cross diagram which indicates GDP at its potential on the horizontal axis.
vertical line |
horizontal line |
sloping upward line |
The pure Keynesian AD-AS model assumes that for any level of GDP below potential, any change in AD affects real GDP, but NOT the ________.
price level |
output level |
spending level |
Suppose an economy is defined by the following: C = 136 + 0.9 (Yd). The (Yd) in this algebraic equation represents the ________.
discretionary income |
pre-tax income |
disposable income |
Equilibrium occurs in the macroeconomy with the income-expenditure model where national income and aggregate expenditure are equal. Where does this equilibrium occur?
Where the aggregate expenditure schedule crosses the real GDP (Y) line. |
Where the aggregate expenditure schedule crosses the 45-degree line. |
Where the aggregate expenditure schedule crosses the potential GDP line. |
What takes place when the economy reaches potential GDP and the aggregate supply becomes vertical?.
The potential GDP is vertical only in the income-expenditure model. |
c, The potential GDP is vertical only in both the income-expenditure model and the traditional AD-AS model. |
The potential GDP is vertical only the traditional AD-AS model. |
Related Book For
The Economics Of The Environment
ISBN: 9780321321664
1st Edition
Authors: Peter Berck, Gloria Helfand
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