An Inflationary Gap Exists When Consumers

question 134

Multiple Choice

An inflationary gap exists when consumers

• A)are saving more than businesses are investing.
• B)and businesses are purchasing less than the economy is capable of producing.
• C)and businesses are demanding more than the economy is capable of producing.
• D)and businesses are demanding less than the full employment level of output.

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Definitions:

Milk

A nutrient-rich liquid produced by the mammary glands of mammals, used as a primary source of nutrition for young mammals before they are able to digest other types of food.

Pareto Optimal

A Pareto optimal outcome is one in which it is impossible to make any individual better off without making at least one individual worse off.

Marginal Rate of Substitution

The rate at which one good can be substituted for another by a consumer without affecting their overall utility level.

Wheat

A cereal grain grown worldwide and a staple food for a large part of the world's human population, used to make products like bread, pasta, and couscous.