If the Economy Is Self-Regulating and in a Recessionary Gap,what

question 23

Multiple Choice

If the economy is self-regulating and in a recessionary gap,what happens?

• A) Wages rise,the SRAS curve shifts leftward,and both Real GDP and the price level rise.
• B) Wages fall,the SRAS curve shifts leftward,the price level rises,and Real GDP falls.
• C) Wages fall,the SRAS curve shifts rightward,and both the price level and Real GDP fall.
• D) Wages fall,the SRAS curve shifts rightward,the price level falls,and Real GDP rises.
• E) none of the above

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Definitions:

Bondholder's Risk

The risk that a bond issuer will default, resulting in the loss of both periodic interest payments and the principal investment to the bondholder.