If the Actual Price Level Is Higher Than the Expected

question 178

Multiple Choice

If the actual price level is higher than the expected price level in an economy, the economy will _____

• A) have no structural unemployment.
• B) experience a recession.
• C) experience stagflation.
• D) expand output in the short run.
• E) have no seasonal unemployment.

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Definitions:

Perfectly Elastic

Perfectly elastic refers to a situation where the quantity demanded or supplied responds infinitely to changes in price.

Perfectly Inelastic

A situation in which the quantity demanded or supplied of a good does not change in response to a change in price.

Elastic

Elastic refers to a situation where the demand for a product or service significantly changes in response to price changes.

Inelastic

Describes a situation where the quantity demanded or supplied of a good or service is relatively unresponsive to changes in its price.