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

question 48

Multiple Choice

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

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