When an Economy Is Experiencing a Negative Output Gap, There

question 105

Multiple Choice

When an economy is experiencing a negative output gap, there is:

• A) deflationary pressure due to low demand.
• B) inflationary pressure due to high demand.
• C) a reduction in purchasing power caused by an inflation rate that is higher than the nominal interest rate.
• D) an increase in inflation that puts it at a higher level than output.

---

Definitions:

Encoding Failure

A situation where the brain fails to create a memory link for information, leading to its inability to be remembered later.

Retrieval Failure

A phenomenon where information cannot be accessed or recalled from memory, often due to interference or insufficient retrieval cues.

Encoding Failure

A situation in which information does not get stored in long-term memory because of inadequate or insufficient encoding processes.

Storage Failure

A failure in the ability to retain information over time, typically referring to long-term memory loss.