When a Fixed Stock of Inputs Cannot Be Reallocated Among

question 59

Multiple Choice

When a fixed stock of inputs cannot be reallocated among firms in an economy without reducing the output of at least one of the goods that is produced in the economy, the allocation satisfies:

• A)exchange efficiency.
• B)input efficiency.
• C)substitution efficiency.
• D)Walras' Law.

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Definitions:

Real GDP

The total value of all goods and services produced by a country, adjusted for inflation or deflation.

Expansionary Gap

A situation in macroeconomics when aggregate output is above potential output, often leading to inflationary pressures.

Recessionary Gap

Describes a situation where the real GDP of an economy is less than its potential GDP, indicating underutilized resources and a sluggish economy.

Deflation

A decrease in the general price level of goods and services in an economy over a period of time, potentially leading to increased unemployment and slower economic growth.