Suppose an Economy Has an Upward-Sloping Aggregate Supply Curve and a Recessionary

question 37

Multiple Choice

Suppose an economy has an upward-sloping aggregate supply curve and a recessionary GDP gap equal to $50 billion.If aggregate demand increases by a total of $50 billion,

• A)The recessionary GDP gap will be eliminated.
• B)The resulting equilibrium GDP will be lower than full employment GDP because some of the additional spending will drive up prices instead of increasing output.
• C)The resulting equilibrium GDP will be greater than full-employment GDP because of demand-pull inflation.
• D)Cyclical unemployment will increase.

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Definitions:

Negative Reinforcement

A technique used to increase the likelihood of a desired behavior by removing an unpleasant stimulus when the behavior occurs.

Positive Reinforcement

The process of encouraging a desired behavior by rewarding it, thereby increasing the likelihood of its recurrence.

Desired Employee Behavior

The specific actions and attitudes that an employer wants to encourage in its workforce to achieve organizational goals.

Secondary Reinforcer

A stimulus that has become rewarding or motivating through its association with a primary reinforcer.