When actual output is less than potential output, there is ________ output gap and the inflation rate will ________.
A. an expansionary; be lower than the expected rate of inflation
B. a recessionary; exceed the expected rate of inflation
C. a recessionary; be lower than the expected rate of inflation
D. an expansionary; exceed the expected rate of inflation
Answer: C
You might also like to view...
In the second quarter (three-month period) of 2016, U.S. nominal GDP increased but U.S. real GDP declined. What can we conclude?
A. Real wages declined by more than real GDP. B. Nominal income declined by more than personal income. C. The price level fell by more than real GDP. D. The price level rose by more than nominal GDP.
The consumer price index (CPI) overstates the true inflation rate because it ignores changes in consumers' purchasing patterns as relative prices change
a. True b. False Indicate whether the statement is true or false
The government defines the poverty line as
A. the lowest income quintile (20%). B. those receiving public assistance or eligible for public assistance. C. anyone who does not have to pay federal income tax. D. a minimum dollar amount of income, depending on family size.
Import bans, import quotas, voluntary export restraints (VERs), and tariffs on goods all:
A. increase equilibrium quantities and prices. B. decrease equilibrium quantities and prices. C. increase equilibrium quantities, but decrease prices. D. decrease equilibrium quantities, but increase prices.