Which of These Changes Is Observed in an Economy When

question 145

Multiple Choice

Which of these changes is observed in an economy when a recessionary gap is closed in the long run?

• A) an increase in the inflation rate and a decrease in the unemployment rate
• B) an increase in the level of output and a decrease in the price level
• C) an increase in both the rate of output and the price level
• D) a decrease in both the rate of output and the price level
• E) a decrease in the inflation rate and an increase in the unemployment rate

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Definitions:

Sole Proprietorship

A business owned and operated by a single individual, with no distinction between the business and the owner.

Closely Held Corporation

A type of company that is owned by a small group of people who are usually closely associated with the business.

Publicly Trades

Pertains to companies whose shares are bought and sold on stock exchanges, allowing investors to purchase ownership interests in the businesses.

Auction Market

A market where buyers and sellers enter competitive bids simultaneously; the price is determined by the highest bid received by the seller.