In Macroland, Potential Output Equals $100 Trillion and the Natural

question 41

Multiple Choice

In Macroland, potential output equals $100 trillion and the natural rate of unemployment is 4 percent. If the actual unemployment rate is 3 percent, then the output gap equals:

• A)−1 percent.
• B)−2 percent.
• C)1 percent.
• D)2 percent.

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Definitions:

Elastic Demand

describes a market situation where the demand for a product significantly changes in response to changes in its price.

Inelastic Demand

A situation where the quantity demanded of a good or service changes little when its price changes.

Movie Theaters

Venues specifically designed for the exhibition of films to the public, where viewers watch movies on large screens.

Price-Discriminate

Price discrimination refers to the strategy where a company sells the same product to different customers at different prices based on factors such as willingness to pay, market segment, or geographic location.