Suppose an Economy Has an Upward-Sloping AS Curve and an Inflationary

question 38

Multiple Choice

Suppose an economy has an upward-sloping AS curve and an inflationary gap equal to $10 billion.If AD shifts to the left by $10 billion,

• A)Real output will fall by less than $10 billion.
• B)Real output will fall by $10 billion.
• C)The inflationary gap will be eliminated.
• D)A recessionary gap will be created.

---

Definitions:

Encoding

The procedure of changing data into a format that allows for its storage in memory.

Information Processing

A theory describing how the human mind takes in, stores, retrieves, and uses information, likening the mind to a computer.

Sensory Storage

The initial process of storing information, taken in through the senses, for a very brief period.

Memory Capacity

The amount of information that can be held in the memory system at one time, varying across short-term and long-term memory stores.