If the Economy Is Experiencing an Inflationary Output Gap,the Adjustment

question 136

Multiple Choice

If the economy is experiencing an inflationary output gap,the adjustment process operates as follows:

• A)Wages do not adjust,but the AD curve shifts to the right.
• B)Wages fall,unit costs fall,and the AD curve shifts rightward.
• C)Wages rise,unit costs rise,and the AS curve shifts leftward.
• D)Wages rise,unit costs rise,and the AS curve shifts rightward.
• E)Wages fall,unit costs fall,and the AS curve shifts rightward.

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