If a Passive Approach Is Followed in Closing an Expansionary

question 134

Multiple Choice

If a passive approach is followed in closing an expansionary gap,_____.

• A)restrictive fiscal policy would be used
• B)restrictive monetary policy would be used
• C)the short-run aggregate supply curve would shift to the right
• D)the price level would decrease in the long run
• E)an economy would experience inflationary pressure

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Definitions:

Behavioral Economics

A field of economics that studies the effects of psychological, social, cognitive, and emotional factors on economic decisions.

Time Inconsistency

The tendency of individuals to change their plans or preferences over time in ways that they themselves will later regard as being against their own interests.

Myopia

Short-sightedness, in a business context, refers to a focus on short-term results at the expense of long-term interests.

Conceptualizing The Future

The process of envisioning and planning for future trends, changes, and developments in an industry or society.