If the price level in an economy rises and its output level decreases as it gravitates toward its potential GDP, then:
a. a policy to manipulate the aggregate supply is being used
b. an active approach to correcting a recessionary gap is being used.
c. an active approach to correcting an expansionary gap is being used.
d. a passive approach to correcting a recessionary gap is being used.
e. a passive approach to correcting an expansionary gap is being used.
e
You might also like to view...
The substitution effect explains why there is an inverse relationship between the price of a product and the quantity of the product demanded
Indicate whether the statement is true or false
Which of the following can a firm do in the long run but not in the short run?
A) decrease the size of its physical plant B) reduce its rate of output by laying off workers C) increase its use of raw materials D) increase its variable costs
If international trade is restricted by the government of a country:
a. the domestic consumers are benefited. b. the domestic producers are adversely affected. c. the domestic consumers pay higher prices for imported goods. d. the resources are equally distributed among domestic and foreign producers. e. the resources are allocated to their highest paid uses.
Which of the following statements is false?
a. If total utility rises, so must marginal utility. b. If marginal utility falls, so must total utility. c. If marginal utility rises, so must total utility. d. If total utility falls, marginal utility is negative.