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The kinked demand curve theory exhibits a gap in price elasticity at the kink point, where firms face different elasticities of demand above and below this price. This gap arises because firms believe that if they increase prices, competitors will not follow, leading to a loss of market share, while if they decrease prices, rivals will match the decrease, resulting in minimal gain in market share. Consequently, this creates price rigidity, as firms are reluctant to change prices due to uncertain responses from competitors.
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How does the slope of the AS curve affect the closure of the GDP gap?
The slope of the Aggregate Supply (AS) curve influences the responsiveness of output to changes in aggregate demand. A flatter AS curve indicates that an increase in demand will lead to a more significant increase in real GDP, helping to close the GDP gap more effectively. Conversely, a steeper AS curve implies that higher demand results in less output increase and potentially more inflation, making it harder to close the GDP gap. Therefore, the slope of the AS curve plays a crucial role in determining how quickly and effectively an economy can adjust to reach its potential output.
How market power is measured?
depends on the size of the gap which is created by the AR/D curve and the MR curve.
When does inflation occur in a dynamic aggregate demand and supply model?
Inflation raises the prices of the goods, so the real wages fall (ceteris paribus). So we are moving on the demand curve up and left. The companies can afford to produce more for that height of the prices, so the gap appears
Does Economies have a self correcting mechanism for inflationary and recessionary gaps Expain?
Yes they do. In an inflationary gap the equilibrium with the aggregate demand and the short run aggregate supply curves is higher than the long run aggregate supply curve. Eventually, the short run aggregate supply curve will slowly move to the left towards equilibrium. Output in an inflationary gap cannot be held up. This is not usually allowed, usually monetary and fiscal policies work to move the aggregate demand. In a recessionary gap, the opposite will happen. The short run aggregate supply curve will move to the right slowly towards equilibrium because the natural rate of unemployment is higher than the actual rate of unemployment so people will be willing to work for less.
What is the lorenz curve and what dose is suggest about the distribution of income on the us?
the Lorenz curve is the curve that illustrates income distribution, the curve states that there is a big income gap between Americans for many reasons: differences in skills and education, inheritances, and field of work. the wealthiest fifth Americans households earned nearly as much income as the four- fifths combined.
How does the slope of the AS curve affect the closure of the GDP gap?
The slope of the Aggregate Supply (AS) curve influences the responsiveness of output to changes in aggregate demand. A flatter AS curve indicates that an increase in demand will lead to a more significant increase in real GDP, helping to close the GDP gap more effectively. Conversely, a steeper AS curve implies that higher demand results in less output increase and potentially more inflation, making it harder to close the GDP gap. Therefore, the slope of the AS curve plays a crucial role in determining how quickly and effectively an economy can adjust to reach its potential output.
Why would an expansionary gap lead to a change in inflation Why would a recessionary gap lead to a change in inflation?
Assuming that the aggregate demand curve does not move, the only way for the gap to be closed is by a shift in aggregate supply. These gaps cause a change in inflation expectations, moving the AS curve left (exp) or right (rec) back to long term equilibrium and changing the inflation rate.
How market power is measured?
depends on the size of the gap which is created by the AR/D curve and the MR curve.
When does inflation occur in a dynamic aggregate demand and supply model?
Inflation raises the prices of the goods, so the real wages fall (ceteris paribus). So we are moving on the demand curve up and left. The companies can afford to produce more for that height of the prices, so the gap appears
Does the string theory bridge the gap between Einstein's theory of relativity and quantum mechanics?
No, string theory is an attempt to bridge the gap between EVERYTHING, not just relativity and quantum, into one fundamental theory.
What is gap grading noticed on a grading curve?
Not assigning grades to specific scores.
Does Economies have a self correcting mechanism for inflationary and recessionary gaps Expain?
Yes they do. In an inflationary gap the equilibrium with the aggregate demand and the short run aggregate supply curves is higher than the long run aggregate supply curve. Eventually, the short run aggregate supply curve will slowly move to the left towards equilibrium. Output in an inflationary gap cannot be held up. This is not usually allowed, usually monetary and fiscal policies work to move the aggregate demand. In a recessionary gap, the opposite will happen. The short run aggregate supply curve will move to the right slowly towards equilibrium because the natural rate of unemployment is higher than the actual rate of unemployment so people will be willing to work for less.
How would you describe the gap theory?
The gap theory first determines the difference between the customer's service expectations and the customer's perception of the service actually received.
Which creation theory has two separate instances of creative activity by God?
Gap theory
How would you define the gap in the gap theory?
This gap is referred to as the service gap and is considered the most important because it determines the level of satisfaction/dissatisfaction with the service and, ultimately, the organization.
What does the emd gap theory suggest?
The EMD gap theory, or the Emergent Mind Development gap theory, posits that there is a disparity between the rapid advancement of technology and the slower evolution of human cognitive and social skills. This gap can lead to challenges in effectively utilizing technological innovations, as individuals may struggle to adapt to new tools and social dynamics. The theory suggests that addressing this gap is crucial for maximizing the benefits of technology in society. It emphasizes the need for education and training to develop the necessary skills to bridge this divide.
What is the theory that sections of active faults that have had few earthquakes are likely to be sites of strong earthquakes in the future called?
This theory is known as the characteristic earthquake model. It proposes that sections of active faults that have not ruptured in recent history (seismic gap) are more likely to produce larger earthquakes in the future to release accumulated stress.
