The main process by which a recessionary gap is eliminated is a(n)
A. increase in wages that shifts the aggregate supply curve inward.
B. drop in wages that shifts the aggregate demand curve inward.
C. increase in wages that shifts the aggregate demand curve outward.
D. drop in wages that shifts the aggregate supply curve outward.
Answer: D
You might also like to view...
Suppose the equilibrium real federal funds rate is 5 percent, the target rate of inflation is 3 percent, the current inflation rate is 5 percent, and real GDP is 4 percent above potential real GDP
If the weights for the inflation gap and the output gap are both 1/2, then according to the Taylor rule the federal funds target rate equals A) 1 percent. B) 9 percent. C) 13 percent. D) 17 percent.
In the short run, the lowest price that a perfectly competitive firm will accept without closing its doors is found by examining the average variable cost curve.
Answer the following statement true (T) or false (F)
"Ceteris paribus" is a Latin expression that means "holding everything else constant."
a. True b. False Indicate whether the statement is true or false
When equilibrium is present, if market conditions do not change,
a. the current price will tend to rise in the future, and the current quantity will tend to fall. b. the current price will tend to fall in the future, and the current quantity will tend to rise. c. the current price and quantity will tend to persist in the future. d. the current price will tend to persist in the future, but the current quantity will tend to rise.