The Diagram Below Shows an AD/AS Model for a Hypothetical

question 114

Multiple Choice

The diagram below shows an AD/AS model for a hypothetical economy which is initially in a short-run equilibrium at point A. FIGURE 24-7 Consider Figure 24-7.At the initial short-run equilibrium,there is ________ output gap of ________.This gap could be closed by a ________.

• A)a recessionary; 100; fiscal contraction
• B)a recessionary; 200; fiscal expansion
• C)an inflationary; 100; fiscal contraction
• D)an inflationary; 200; fiscal contraction
• E)an inflationary; 350; fiscal expansion

---

Definitions:

Life Cycle

The series of stages that an organism, product, or system goes through from its inception to its termination or end.

Market Research

The process of gathering, analyzing, and interpreting information about a market, including potential customers and competitors.

Production Efficiencies

The maximization of output from a given set of inputs through optimal allocation of resources and processes in manufacturing or production.

GE Business Screen

A strategic planning tool similar to the BCG matrix, developed by General Electric, used for assessing the various business units or products in a company's portfolio.