The Table Below Shows Data for India?s Economy The Economy Is Experiencing___________ Gap and Firms Will ___________

question 109

Multiple Choice

The table below shows data for India?s economy. Real GDP is measured in millions of rupees. Suppose that full employment occurs when real GDP is 27,000 million rupees. $$\begin{array} { | l | l | l | l | } \hline & \text { Price level } & \begin{array} { l } \text { Real GDP } \\\text { supplied in the short } \\\text { run }\end{array} & \text { Real GDP demanded } \\\hline \text { a } & 114 & 23,501 & 35,898 \\\hline \text { b } & 120 & 25,355 & 32,341 \\\hline \text { c } & 125 & 27,670 & 27,670 \\\hline \text { d } & 131 & 30,366 & 18,569 \\\hline \text { e } & 138 & 33,164 & 15,898 \\\hline\end{array}$$ The economy is experiencing___________ gap and firms will ___________ .

• A) a recessionary gap; increase production
• B) a recessionary gap; decrease money wages paid to workers
• C) an inflationary gap; increase production
• D) an inflationary gap; increase money wages paid to workers

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Definitions:

Net Operating Income

The total profit of a company after operating expenses are subtracted from gross profit.

ROI

Return on Investment, a performance measure used to evaluate the efficiency or profitability of an investment relative to its cost.

Contribution Margin Ratio

The percentage of sales revenue remaining after variable costs are subtracted, indicating how much contributes to covering fixed costs and generating profit.

Fixed Expenses

Costs that remain constant regardless of the level of production or business activity.