Related to the Economics in Practice on P

question 60

Multiple Choice

Related to the Economics in Practice on p. 547: In the simple "Keynesian" view, if planned aggregate expenditure and aggregate demand exceed capacity output, there is

• A) an inflationary gap and price level rises.
• B) an inflationary gap and price level falls.
• C) a recessionary gap and price level rises.
• D) a recessionary gap and price level falls.

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Definitions:

Earnings

The amount of money that an individual or business receives in exchange for labor, services, or investing capital, typically measured over a specific period of time.

Deductions

To deduct or subtract; remove, take away.

Longevity

A long duration of life; lasting a long time.

Profit Sharing

A system by which employees receive a share of the profits of a business enterprise.