The Rate at Which Aggregate Supply Changes to Restore Equilibrium

question 105

Multiple Choice

The rate at which aggregate supply changes to restore equilibrium at potential output depends crucially on:

• A)how quickly planned investment spending adjusts to changes in population growth.
• B)how quickly planned consumption spending adjusts to changes in the price level and nominal wages.
• C)how quickly technology changes to increase aggregate supply.
• D)whether the economy is experiencing a recessionary gap or an expansionary gap.
• E)how quickly real wages adjust to restore full employment in the labor market.

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Definitions:

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