To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change.
B. increase.
C. decrease.
D. either increase or decrease depending on the relative shifts of AD and AS.
Answer: C
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a. True b. False Indicate whether the statement is true or false
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a. are regarded as investment in human capital. b. are an important cause of income differentials. c. involve workers' sacrificing current income in order to enjoy higher future income. d. All of the above are correct.
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Like the supply curve for individual goods and services, the aggregate supply curve slopes upward and to the right
a. True b. False Indicate whether the statement is true or false