Which of the Following Is True of an Expansionary Gap

question 1

Multiple Choice

Which of the following is true of an expansionary gap?

• A)It develops when the expected price level exceeds the actual price level.
• B)In the long run,this gap will close when resource suppliers negotiate lower resource payments.
• C)It measures the amount by which actual output falls short of the economy's potential.
• D)In the long run,this gap will close when the short-run aggregate supply curve shifts rightward.
• E)In the long run,this gap will close when resource suppliers negotiate higher resource payments.

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Definitions:

Savings And Loan

Financial institutions that primarily accept savings accounts and provide mortgage lending, historically focusing on residential mortgages.

Taxpayers

Individuals or entities that are obliged to pay taxes to a government authority based on their income, property, or consumption.

Speculative Demand

The demand for goods not for immediate consumption, but for investment purposes with the hope of future price appreciation.

Commercial Banks

Financial institutions that accept deposits, offer various loans, and provide other financial services, like wealth management and currency exchange.