Starting from Potential Output, If Firms Become Less Optimistic and Decide

question 18

Multiple Choice

Starting from potential output, if firms become less optimistic and decide to decrease their investment in new capital, then this will shift the ______ curve to the left and generate ______.

• A)aggregate demand; a recessionary output gap
• B)aggregate supply; a recessionary output gap
• C)aggregate demand; an expansionary output gap
• D)aggregate supply; an expansionary output gap

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Definitions:

Gene

A unit of heredity that is transferred from parent to offspring and is held to determine some characteristic of the offspring.

Newborns

Infants that are very recently born, typically considered to be up to one month old.

Coin Tosses

A simple random experiment involving flipping a coin to determine two possible outcomes: heads or tails.

Standard Deviations

A measure of the dispersion or variation in a distribution or set of data, indicating how much individual data points deviate from the mean.