When the Inflationary Gap Is Finally Eliminated, a Long-Run Equilibrium

question 31

Multiple Choice

When the inflationary gap is finally eliminated, a long-run equilibrium is established with a ____ price level and with GDP ____ potential GDP.

• A)higher; equal to
• B)higher; greater than
• C)lower; equal to
• D)lower; greater than

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Definitions:

Amnesia

A condition characterized by a partial or total loss of memory, often due to brain injury, disease, or psychological trauma.

Primitive Brain

Refers to the brain structures responsible for basic survival functions, often associated with the brainstem and limbic system.

Cerebellum

A part of the brain located at the back and beneath the cerebrum, responsible for coordinating voluntary movements and maintaining balance and posture.

Coordinating Muscle

The process of different muscle groups working together smoothly to perform a movement or maintain posture.