The real GDP and actual price level when the actual price level exceeds the expected price level. Concept Introduction: Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output. Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Question

Sue is a sole proprietor of her own sewing business. Revenues are $150,000 per year and raw material (cloth, thread) costs are $130,000 per year. Sue pays herself a salary of $60,000 per year but gave up a job with a salary of $80,000 to run the business. ○ A. Her accounting profits are $0. Her economic profits are - $60,000. ○ B. Her accounting profits are $0. Her economic profits are - $40,000. ○ C. Her accounting profits are - $40,000. Her economic profits are - $60,000. ○ D. Her accounting profits are - $60,000. Her economic profits are -$40,000.

Answer 1

Question

Chapter 10, Problem 2.3P

Sub-part

A

To determine

The real GDP and actual price level when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

B

To determine

The expansionary and recessionary Gap when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

C

To determine

The real GDP and actual price level when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

D

To determine

The expansionary and recessionary Gap when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

E

To determine

The real GDP and actual price level when the actual price level equals the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

F

To determine

The expansionary and recessionary Gap when the actual price level is equal to the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

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Sue is a sole proprietor of her own sewing business. Revenues are $150,000 per year and raw material (cloth, thread) costs are $130,000 per year. Sue pays herself a salary of $60,000 per year but gave up a job with a salary of $80,000 to run the business. ○ A. Her accounting profits are $0. Her economic profits are - $60,000. ○ B. Her accounting profits are $0. Her economic profits are - $40,000. ○ C. Her accounting profits are - $40,000. Her economic profits are - $60,000. ○ D. Her accounting profits are - $60,000. Her economic profits are -$40,000.

Select a number that describes the type of firm organization indicated. Descriptions of Firm Organizations: 1. has one owner-manager who is personally responsible for all aspects of the business, including its debts 2. one type of partner takes part in managing the firm and is personally liable for the firm's actions and debts, and the other type of partner takes no part in the management of the firm and risks only the money that they have invested 3. owners are not personally responsible for anything that is done in the name of the firm 4. owned by the government but is usually under the direction of a more or less independent, state-appointed board 5. established with the explicit objective of providing goods or services but only in a manner that just covers its costs 6. has two or more joint owners, each of whom is personally responsible for all of the partnership's debts Type of Firm Organization a. limited partnership b. single proprietorship c. corporation Correct Number

The table below provides the total revenues and costs for a small landscaping company in a recent year. Total Revenues ($) 250,000 Total Costs ($) - wages and salaries 100,000 -risk-free return of 2% on owner's capital of $25,000 500 -interest on bank loan 1,000 - cost of supplies 27,000 - depreciation of capital equipment 8,000 - additional wages the owner could have earned in next best alternative 30,000 -risk premium of 4% on owner's capital of $25,000 1,000 The economic profits for this firm are ○ A. $83,000. B. $82,500. OC. $114,000. OD. $83,500. ○ E. $112,500.

Answer 2

Question

Chapter 10, Problem 2.3P

Sub-part

A

To determine

The real GDP and actual price level when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

B

To determine

The expansionary and recessionary Gap when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

C

To determine

The real GDP and actual price level when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

D

To determine

The expansionary and recessionary Gap when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

E

To determine

The real GDP and actual price level when the actual price level equals the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

F

To determine

The expansionary and recessionary Gap when the actual price level is equal to the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Expert Solution & Answer

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Answer 3

Question

Chapter 10, Problem 2.3P

Sub-part

A

To determine

The real GDP and actual price level when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

B

To determine

The expansionary and recessionary Gap when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

C

To determine

The real GDP and actual price level when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

D

To determine

The expansionary and recessionary Gap when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

E

To determine

The real GDP and actual price level when the actual price level equals the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

F

To determine

The expansionary and recessionary Gap when the actual price level is equal to the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

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Answer 4

Question

Chapter 10, Problem 2.3P

Sub-part

A

To determine

The real GDP and actual price level when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

B

To determine

The expansionary and recessionary Gap when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

C

To determine

The real GDP and actual price level when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

D

To determine

The expansionary and recessionary Gap when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

E

To determine

The real GDP and actual price level when the actual price level equals the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

F

To determine

The expansionary and recessionary Gap when the actual price level is equal to the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

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Answer 5

Chapter 10, Problem 2.3P

Sub-part

A

To determine

The real GDP and actual price level when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

B

To determine

The expansionary and recessionary Gap when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

C

To determine

The real GDP and actual price level when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

D

To determine

The expansionary and recessionary Gap when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

E

To determine

The real GDP and actual price level when the actual price level equals the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

F

To determine

The expansionary and recessionary Gap when the actual price level is equal to the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 6

Chapter 10, Problem 2.3P

Sub-part

A

To determine

The real GDP and actual price level when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 7

Chapter 10, Problem 2.3P

Sub-part

A

To determine

The real GDP and actual price level when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 8

Sub-part

B

To determine

The expansionary and recessionary Gap when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 9

Sub-part

B

To determine

The expansionary and recessionary Gap when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 10

Sub-part

C

To determine

The real GDP and actual price level when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 11

Sub-part

C

To determine

The real GDP and actual price level when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 12

Sub-part

D

To determine

The expansionary and recessionary Gap when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 13

Sub-part

D

To determine

The expansionary and recessionary Gap when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 14

Sub-part

E

To determine

The real GDP and actual price level when the actual price level equals the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 15

Sub-part

E

To determine

The real GDP and actual price level when the actual price level equals the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 16

Sub-part

F

To determine

The expansionary and recessionary Gap when the actual price level is equal to the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 17

Sub-part

F

To determine

The expansionary and recessionary Gap when the actual price level is equal to the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 18

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Answer 29

Ch. 10 - Prob. 1.1P Ch. 10 - Prob. 1.2P Ch. 10 - Prob. 2.3P Ch. 10 - Prob. 2.4P Ch. 10 - Prob. 3.5P Ch. 10 - Prob. 4.6P

Solution Summary: The author explains the expansionary and recessionary gap between actual output and potential output under full employment situation.

Chapter 10 Solutions