Which of the following occurs when an expansionary gap is closed in the long run by the action of firms?
What will be an ideal response?
Output decreases, and the price level increases.
You might also like to view...
Improvements in labor productivity
A) affect the level of wages, but do not affect the rate of economic growth. B) affect the level of profit, but do not affect the rate of economic growth. C) hinder economic growth, because they cause unemployment. D) contribute to economic growth.
The nice thing about foreign exchange markets is that the goods are money, and they are paid for with money. This means that if the U.S. dollar ____ the Japanese yen ____
a. goes down; goes down b. goes up; goes up c. buys more yen; buys more dollars d. buys fewer yen; buys fewer dollars e. buys more yen; buys fewer dollars
If the interest rate increased, which of the following would occur?
a. Nothing would occur. b. The consumption-income line would shift downward. c. The consumption-income line would shifts upward. d. There would be an rightward movement along the consumption-income line. e. There would be a leftward movement along the consumption-income line.
What statement about the savings and loan crisis of the 1980s is true?
a. Many savings and loan depositors lost their entire savings. b. A combination of deposit insurance and deregulation had encouraged savings and loans to take risks. c. Depositors panicked and made runs on the savings and loans, which had a waterfall effect. d. Savings and loans had to pay about $150 billion to cover their financial losses.