A deflationary gap occurs because
A) Governments set full employment output at too high a level.
B) Prices in the economy are too low to ensure that all resources are fully utilized in the economy.
C) The level of expenditure in an economy is less than that needed to maintain full employment output.
D) Planned spending turns out to equal actual spending above full employment output
E) There are not enough resources in the economy to meet consumption requirements.
Correct Answer:
Verified
Q9: John Maynard Keynes' General Theory was an
Q10: A deflationary gap exists when there is
Q11: The IS curve measures points where the
Q12: An increase in the demand for money
Q13: On a Keynesian cross diagram, the 45
Q15: Which of the following statements about the
Q16: If the economy was in equilibrium where
Q17: Keynes believed that a key element of
Q18: The government increases spending by €10 billion
Q19: The IS curve will be flatter the
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents