An Inflationary Output Gap Is Characterized by

question 149

Multiple Choice

An inflationary output gap is characterized by

• A)falling prices.
• B)constant prices.
• C)real output that varies one-for-one with aggregate demand.
• D)real GDP exceeding potential output.
• E)real GDP falling below potential output.

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Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded.

Equilibrium Price

The price at which the quantity of a product offered is equal to the quantity of the product in demand, thus the market is in balance.

Compact Discs

Optical storage media used to store data, including music and software, readable by laser-based players and computers.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a certain period of time.