In the above figure, if the relevant aggregate demand curve is AD2, what type of gap exists and how large is it?
A) inflationary gap of 1 trillion B) recessionary gap of 500 billion
C) inflationary gap of 500 billion D) recessionary gap of 1 trillion
Question 2
If Eddie can produce 40 milk shakes or 20 banana splits in an hour, and Tina can produce 30 milk shakes or 16 banana splits in an hour, then Tina has a comparative advantage in producing banana splits.
Indicate whether the statement is true or false
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