Consider an Output Gap Where Y < Y^*

question 45

Multiple Choice

Consider an output gap where Y < Y^*.This output gap

• A)is desirable because it keeps wage costs low.
• B)represents a loss of output due to unemployed resources.
• C)tends to force prices up.
• D)occurs when there is excess demand.
• E)is known as an inflationary boom.

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Definitions:

Competitors' Prices

The cost at which rival businesses offer similar goods or services in the market.

Potential Competitors

Potential competitors are businesses or entities not currently in a market but have the capability and interest to enter the market and compete for the same customer base.

Price-sensitive

Describes consumers or markets that are highly responsive to changes in price, where price changes can significantly impact demand.

Customer Service

Activities and support provided by a company to its customers before, during, and after a purchase to enhance satisfaction and loyalty.