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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Keynes and his followers believed that
A) the economy could not operate at any level of real Gross Domestic Product (GDP) less than full capacity. B) capitalism was one economic system that guaranteed full employment. C) wages and prices in the short run were flexible. D) there was no guarantee that a capitalist economy would reach a full employment equilibrium.
All players have dominant strategies
a. True b. False Indicate whether the statement is true or false
Changes in the GDP deflator reflect only changes in the prices of goods and services
a. True b. False Indicate whether the statement is true or false
Taxes that are enacted to mitigate the effects of negative externalities are sometimes called
a. control taxes. b. command levies. c. Pigovian taxes. d. Marshallian taxes.