Which of the Following Is True of an Expansionary Gap

question 1

Multiple Choice

Which of the following is true of an expansionary gap?

• A)It develops when the expected price level exceeds the actual price level.
• B)In the long run,this gap will close when resource suppliers negotiate lower resource payments.
• C)It measures the amount by which actual output falls short of the economy's potential.
• D)In the long run,this gap will close when the short-run aggregate supply curve shifts rightward.
• E)In the long run,this gap will close when resource suppliers negotiate higher resource payments.

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Definitions:

Minimum Wage

The lowest amount that employers may pay under federal or state law, stated as an amount of pay per hour.

Social Policy

Policies and principles aimed at improving the welfare and quality of life for the population, typically in areas such as health, education, and social security.

FLSA

The Fair Labor Standards Act, a U.S. labor law that creates the right to a minimum wage, and "time-and-a-half" overtime pay when people work over forty hours a week.

Minimum Wage

The lowest legal hourly pay that employers can give to workers, set by government law.