Suppose That an Economy Is in an Inflationary Gap in the Short

question 146

Multiple Choice

Suppose that an economy is in an inflationary gap in the short run. In the long run:

• A) the economy's self-correcting mechanism will restore GDP to its potential level.
• B) inflation will spiral unless the government takes dramatic fiscal measures.
• C) sustained inflation will reduce the value of money.
• D) fiscal and monetary policies may lower prices, but output will remain higher than potential level.

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Definitions:

Age

A demographic factor referring to the length of time that an individual or entity has been alive or in existence, often considered in marketing, social studies, and human resource management.

Income

The monetary payment received for goods or services, or from other sources, as rents or investments.

Communication

The process of exchanging information or ideas through various means, including speech, writing, visual images, or digital platforms.

Exchange

The process by which two or more parties trade goods, services, or other values to the mutual benefit of both or all.