A Recessionary Gap Is Usually Closed in the Long Run

question 127

Multiple Choice

A recessionary gap is usually closed in the long run by a(n) :

• A)rightward shift of the short-run aggregate supply curve.
• B)leftward shift of the short-run aggregate supply curve.
• C)rightward movement along a fixed short-run aggregate supply curve.
• D)decrease in aggregate demand.
• E)leftward movement along a fixed short-run aggregate supply curve.

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Definitions:

Average Variable Cost

The total variable cost of production divided by the quantity of output produced, reflecting the cost per unit of output.

Market Price

The present cost for purchasing or selling an asset or service in a market environment.

Purely Competitive Market

A theoretical market structure where numerous buyers and sellers trade homogeneous products, ensuring no single participant can influence market prices.

Average Total Cost

The sum of all production costs (fixed and variable) divided by the quantity of output produced.