Equilibrium GDP in Excess of Potential GDP Eventually Will Cause

question 27

Multiple Choice

Equilibrium GDP in excess of potential GDP eventually will cause the aggregate

• A)demand curve to shift outward.
• B)supply curve to shift outward.
• C)supply curve to shift inward.
• D)demand curve to become flatter.

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Definitions:

Nominal Interest Rate

The interest rate before adjustments for inflation; the stated or face interest rate on a loan or investment.

Real Rate of Interest

Real Rate of Interest is the interest rate that has been adjusted to remove the effects of inflation, providing a more accurate measure of the cost of borrowing.

Rate of Inflation

This refers to the annual percentage increase in the general price level of goods and services in an economy over a period of time.

Effective Usury Laws

Laws designed to set maximum interest rates that can be charged on loans, to prevent lenders from charging excessively high rates.