In the First Half of 2008, Food and Energy Costs

question 315

Multiple Choice

In the first half of 2008, food and energy costs in the United States increased. At the same time, the financial crisis slowed production. As a result, economists warned that the economy would

• A) suffer an inflationary gap.
• B) see a decrease in aggregate demand and an increase in long-run aggregate supply.
• C) see an increase in potential GDP.
• D) experience stagflation.

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Definitions:

Motorcycle

A two-wheeled vehicle powered by an engine, designed for individual or small-number passenger transport.

Terms of Trade

The ratio between a country's export prices and its import prices, influencing the balance of trade.

Oranges

Citrus fruits with a round shape and a striking orange color, known for being a rich source of vitamin C.

Bananas

A common fruit that also symbolizes an economic product subject to trade, pricing, and supply chain dynamics.