CH.9 Classical Macroeconomics & The Self-Regulating Economy Flashcards
1
Q
What is Say’s Law?
A
Say’s Law states that supply creates its own demand – meaning that production creates enough demand to purchase all the goods & services the economy produces.
2
Q
What is a recessionary gap?
A
A recessionary gap is a condition in which the Real GDP that the economy is producing is less than the Natural Real GDP and the unemployment rate is greater than the natural unemployment rate.
3
Q
What is an inflationary gap?
A
An inflationary gap is a condition in which the Real GDP that the economy is producing is greater than the Natural Real GDP and the unemployment rate is less than the natural unemployment rate.
4
Q
What is laissez-faire?
A
Laissez-faire is a public policy of not interfering with market activities in the economy.
