Statement I

question 220

Multiple Choice

Statement I.When there's an inflationary gap,equilibrium GDP is greater than full employment GDP.
Statement II: Full employment GDP is the level of spending necessary to purchase the output,or aggregate supply,of a fully employed economy.

• A)Statement I is true and statement II is false.
• B)Statement II is true and statement I is false.
• C)Both statements are true.
• D)Both statements are false.

---

Definitions:

Deadweight Loss

A decrease in economic efficiency occurring when a good or service does not reach its free market equilibrium.

Economic Profits

The difference between total revenue and total economic costs (including both explicit and implicit costs), representing the additional income above the opportunity cost.

Monopoly

A market structure characterized by a single seller who has exclusive control over the supply of a good or service, and where the entry of new firms is hindered.

Monopolist's Profit

The excess revenue a monopolist earns over its costs, attributable to its ability to set prices above competitive levels due to lack of competition.