An Inflationary Output Gap Implies That

question 116

Multiple Choice

An inflationary output gap implies that

• A)the demand for all factor services will be relatively low.
• B)the intersection of AD and AS occurs at real GDP below potential output.
• C)the economy's resources are being used beyond their normal capacity.
• D)there is a pressure for wages to decrease.
• E)there is excess supply of most factors of production.

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Definitions:

Contextual Reference

The process of relating information to its context, which includes the conditions or circumstances that are relevant to the information's purpose or understanding.

Biological Causality

The concept that biological factors can cause certain phenomena, including behaviors or diseases.

Nonfunctionality

The state or condition of not performing or being unable to perform a specified function or task.

French West Indies

A region in the Caribbean consisting of French overseas territories, renowned for its unique blend of French and Caribbean culture.