If GDP Is ________ Potential Output, Adjustment to the Long-Run

question 45

Multiple Choice

If GDP is ________ potential output, adjustment to the long-run equilibrium requires that output falls and prices ________.

• A) above; rise
• B) above; fall
• C) below; rise
• D) below; fall

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Definitions:

James K. Polk

The 11th President of the United States (1845-1849), known for his expansionist policy that led to significant territorial acquisitions.

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A country located in the southern part of North America, known for its rich history, cultural diversity, and significant economic growth.

Spanish Independence

The process through which Spain gained independence from Moorish rule in 1492 and later from Napoleonic France in the early 19th century.