Consider an Economy That Is Both in Long-Run and Short-Run

question 65

Multiple Choice

Consider an economy that is both in long-run and short-run equilibrium. Which of the following is likely to cause a positive output gap?

• A) An increase in production costs due to an increase in oil prices.
• B) A substantial increase in interest rates.
• C) Implementation of new technology that increases productivity of existing workers.
• D) Introduction of higher income tax rates.

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Definitions:

Federal Arbitration Act

A United States federal law that provides for the enforcement of arbitration agreements and governs the proceedings of arbitration in commercial disputes.

Arbitration Act of 1980

Legislation that governs the process of arbitration, a form of alternative dispute resolution, in specific jurisdictions, facilitating and regulating the settling of disputes outside the court system.

Interstate Commerce

Refers to any trade, traffic, or transportation within the U.S. that crosses state boundaries or affects more than one state.

Arbitration Clause

A clause in a contract providing that, in case of a dispute, the parties will determine their rights through arbitration rather than through the judicial system.