Examples of output gap in the following topics:
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- A monetary authority will typically pursue expansionary monetary policy when there is an output gap - that is, a country is producing output at a lower level than its potential output.
- Without a policy intervention the output gap may correct itself, if falling wages and prices shift the short-run aggregate supply curve to the right until the economy returns to the long-run equilibrium.
- Alternatively, the monetary authority could intervene in order to increase aggregate demand and close the output gap.
- A lower exchange rate makes a country's goods relatively more affordable for the rest of the world, stimulating exports and further increasing output.
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- When the economy is producing less than potential output, expansionary fiscal policy can be used to employ idle resources and boost output.
- According to Keynesian economics, if the economy is producing less than potential output, government spending can be used to employ idle resources and boost output.
- In instances of recession, government spending does not have to make up for the entire output gap.
- Conversely, to close an expansionary gap, the government would increase income taxes, which decreases aggregate demand, the real GDP, and then prices.
- Crowding out occurs when government spending simply replaces private sector output instead of adding additional output to the economy.
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- A budget deficit will typically increase the equilibrium output and prices, but this may be offset by crowding out.
- This is the budget gap still exists when the economy is at full employment and producing at full potential output levels.
- For example, if the government decides to implement a new program to build military aircraft without adjusting any sources of revenue, aggregate demand will shift to the right, raising prices and output.
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- Cournot's analysis of two sellers of spring water clearly established that the price and output of one seller was a reaction to the price and output of the other seller.
- If they compete, Cournot concluded that the output would be
- The output may be homogeneous or differentiated.
- At the prevailing price, there is a kink in the demand function and an associated gap or discontinuity in the MR (shown as the gap from J to F in Figure VIII.6).
- The marginal cost function can rise to MC1 or fall to MC2 with no change in output or price.
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- The downside to this method is that it does not specifically capture where the inequality occurs, simply the degree of severity in the income gap.
- The gaps between two entropies is called redundancy, which acts as a negative entropy measure in the system.
- Comparing these gaps and inequality levels (high entropy or high redundancy) is the basic premise behind the Theil Index.
- Minimizing this inequality is the sign of a mature and advanced society with high standards of living across the board, while substantial income gaps are indicative of a developing or struggling economy.
- Some powerful economies, like the United States and China, demonstrate high inequality despite high economic power while others, like Switzerland or Norway, demonstrate high equality despite lower economic output.
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- The balance of trade is the difference between the monetary value of exports and imports of output in an economy over a certain period.
- The balance of trade is the difference between the monetary value of exports and imports of output in an economy over a certain period, measured in the currency of that economy.
- A positive balance is known as a trade surplus if it consists of exporting more than is imported; a negative balance is referred to as a trade deficit or, informally, a trade gap.
- This is because national income is also equal to output, and all individual income either goes to pay for consumption (C), to pay taxes (T), or becomes savings (S).
- Assuming that the economy is at potential output (meaning Y is fixed), if the budget deficit increases and savings and investment remain the same, then net exports must fall, causing a trade deficit.
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- Output can be consumed or used for further production.
- Output is important on a business and national scale because it is output, not large sums of money, that makes a company or country wealthy.
- Krispy Kreme's output is donuts.
- It generates revenue by selling its output.
- It is however, a profit maximizer, not an output or revenue maximizer.
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- In the short run, output fluctuates with shifts in either aggregate supply or aggregate demand; in the long run, only aggregate supply affects output.
- In economics, output is the quantity of goods and services produced in a given time period.
- National output is what makes a country rich, not large amounts of money.
- Short-run nominal fluctuations result in a change in the output level .
- The AD curve shifts to the right which increases output and price.
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- The production function relates the maximum amount of output that can be obtained from a given number of inputs.
- In economics, a production function relates physical output of a production process to physical inputs or factors of production.
- This production function says that a firm can produce one unit of output for every unit of capital or labor it employs.
- For example, the firm could produce 25 units of output by using 25 units of capital and 25 of labor, or it could produce the same 25 units of output with 125 units of labor and only one unit of capital.
- For example, a firm with five employees will produce five units of output as long as it has at least five units of capital.
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- The American government also wants to negotiate further reductions in trade barriers affecting agricultural products; currently the United States exports the output of one out of every three hectares of its farmland.
- In the 1990s, the U.S. trade deficit with China grew to exceed even the American trade gap with Japan.