Author Question: Suppose the economy is initially experiencing a recessionary gap. A reduction in the size of the ... (Read 49 times)

drink · **on:** Jun 29, 2018

Suppose the economy is initially experiencing a recessionary gap. A reduction in the size of the budget deficit will cause which of the following in the short run?

A) a reduction in the size of the recessionary gap and increase in real GDP.
B) an increase in the size of the recessionary gap and decrease in real GDP.
C) an increase in inflation and increase in aggregate supply.
D) an inflationary gap.

Question 2

When comparing across countries, the higher the rate of saving

A) the lower the level of per capita real Gross Domestic Product (GDP).
B) the higher the level of per capita real Gross Domestic Product (GDP).
C) the less industrialized the country.
D) the lower the productivity rates.