​ Assume the Economy Is Experiencing an Inflationary Gap, Classical

question 24

Multiple Choice

​ Assume the economy is experiencing an inflationary gap, classical economists believe that:

• A) ​flexible wages will restore full employment.
• B) ​the federal government should decrease spending to shift the aggregate demand curve leftward.
• C) ​the Federal Reserve should lower the interest rate.
• D) ​the federal government should increase spending to shift the aggregate demand curve rightward.

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Definitions:

Negotiability

The ability of a financial instrument to be transferred from one party to another with the title passing legally to the transferee.

United States

A federal republic consisting of fifty states, a federal district, and various territories, characterized by its democratic government and diverse population.

Comparative Negligence

A principle of tort law that compares the fault of each party involved in an accident and allocates the damages accordingly.

Forgeries

The act of fraudulently making or altering a document or item with the intent to deceive.