When the Current State of the Economy Is Such That

question 11

Multiple Choice

When the current state of the economy is such that Real GDP is equal to Natural Real GDP,the economy is in ____________________ .In this situation,the (actual) unemployment rate is ___________ the natural unemployment rate,and there is ________________ in the labor market.

• A) long-run equilibrium; equal to; equilibrium
• B) inflationary; less than; a shortage
• C) long-run equilibrium; greater than; equilibrium
• D) recessionary; greater than; a surplus
• E) recessionary; less than; equilibrium

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Definitions:

Bananas

A tropical fruit with a signature yellow peel and soft, sweet flesh, widely consumed around the world and rich in potassium.

Perfect Substitutes

Perfect substitutes are two goods that can be used in place of each other with no loss of utility or preference by consumers.

Income Effect

Refers to the change in an individual's or economy's purchase of goods and services resulting from changes in income levels.

Substitution Effect

The change in consumption patterns due to a change in relative prices, holding the consumer's level of utility constant.