Question 1: When the economy is in equilibrium __________.
a. there are increases in inventory
b. there are decreases in inventory
c. total expenditures equal total production
d. people want to buy more than will be produced
Question 2: Suppose the economy's short-run equilibrium point is to the left of the National Real GDP. Which of the following is true?
a. The economy is in a recessionary gap.
b. The economy is in an inflationary gap.
c. The economy is in long-run equilibrium.
d. This situation is actually impossible, according to economic theory.