Refer to the Figure Below

question 19

Multiple Choice

Refer to the figure below. Based on the figure, if the economy is in short-run equilibrium with output equal to 24,000, then there is ______, and ______ could return the economy to potential output (Y*) .

• A)an expansionary gap; a decrease in autonomous expenditures of 1,000
• B)an expansionary gap; a decrease in autonomous expenditures of 4,000
• C)a recessionary gap; an increase in autonomous expenditures of 1,000
• D)a recessionary gap; an increase in autonomous expenditures of 4,000

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Definitions:

Punitive Damages

Financial compensation awarded in lawsuits as a punishment to the defendant, over and above actual damages.

Deterrent

Something that discourages or prevents a person or action through fear of consequences or negative outcomes.

Consequential Damages

Refers to secondary effects or financial losses that result indirectly from a breach of contract.

Lost Profits

Potential earnings that were not realized due to the wrongful acts of another party, frequently sought as damages in legal disputes.