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:

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Behavior Chain

A sequence of events or actions that are connected and lead to a particular behavior or outcome.

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Describes an action or process that has been paused or discontinued before its completion.

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