In Figure 9

question 16

Multiple Choice

In Figure 9.6,if full employment occurs at Q_A, then aggregate demand is

• A)Just right,causing no cyclical unemployment.
• B)Too great,causing an inflationary gap.
• C)Too small,causing an inflationary gap.
• D)Too great,causing a recessionary gap.

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Definitions:

Accounting Profits

The difference between total revenues and explicit costs, representing the net income reported on a company's financial statements.

Economic Profits

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs.

Accounting Profits

The net income for a company after all expenses have been deducted from revenues, according to generally accepted accounting principles.