Asked by
Hamza Bello
on Nov 11, 2024
Verified
Which of the following occurs when an expansionary gap is closed in the long run by the action of firms?
A) Output decreases,and the price level increases.
B) Inflation decreases,and unemployment rises.
C) Both the equilibrium output and the price level increase.
D) Both the equilibrium output and the price level decrease.
E) Inflation rises,and unemployment decreases
Expansionary Gap
A situation where real GDP exceeds potential GDP, often leading to inflationary pressures due to high demand in an economy.
Equilibrium Output
The level of output where the quantity of goods and services produced equals the quantity of goods and services demanded.
- Define and depict the particulars of expansionary and contractionary disparities.
- Analyze the effects of shifts in aggregate demand and aggregate supply on economic equilibrium.
Verified Answer
TS
Learning Objectives
- Define and depict the particulars of expansionary and contractionary disparities.
- Analyze the effects of shifts in aggregate demand and aggregate supply on economic equilibrium.
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