As a Recessionary Gap Is Eliminated Through an Economy's Self-Correcting

question 66

Multiple Choice

As a recessionary gap is eliminated through an economy's self-correcting adjustments process,

• A) the equilibrium price level increases and the equilibrium real output decreases.
• B) the equilibrium price level decreases and the equilibrium real output increases.
• C) the equilibrium price level and the equilibrium real output increase.
• D) the equilibrium price level and the equilibrium real output decrease.

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Definitions:

Devalues Its Currency

A country intentionally lowering the value of its national currency relative to other currencies to boost exports and improve its trade balance.