What Was the "Domino Theory

question 47

Multiple Choice

What was the "domino theory"?

• A) A theory that ascribed Soviet aggressiveness to Moscow's desire for security.
• B) A theory the viewed communism as inherently expansionist.
• C) A theory communist China was responsible for the invasion of South Korea in 1950.
• D) A theory that if one country fell to communism, its neighbors would soon suffer a similar fate.

---

Definitions:

Recessionary Gap

The difference between the actual output of an economy and its potential output, occurring when the economy is underperforming.

Expansionary Gap

A situation where the actual output in an economy exceeds the potential output, often leading to inflation.

Cost-Push Inflation

Cost-push inflation is caused by an increase in the prices of production inputs like labour and raw materials, leading to decreased supply and increased cost of finished goods.

Potential Output

This refers to the maximum output an economy can produce without leading to inflation, assuming all resources are fully utilized.