Which of the Following Is True of a Recessionary Gap

question 56

Multiple Choice

Which of the following is true of a recessionary gap?

• A) It develops when the expected price level is less than the actual price level.
• B) In the long run, this gap closes when resource suppliers negotiate lower resource payments.
• C) It measures the amount by which actual output is greater than an economy's potential output.
• D) In the long run, this gap closes when the short-run aggregate supply curve shifts leftward.
• E) In the long run, this gap closes when the aggregate demand curve shifts rightward.

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Definitions:

Income

refers to the money received, especially on a regular basis, for work or through investments.

Individual-Level Explanation

An approach to understanding phenomena by looking at the individual factors, such as personal choices and behaviors, that contribute to the outcome.

Macrolevel Explanation

An explanation that focuses on large-scale social processes and structures, considering the broader societal context.

Culture-Of-Poverty

A concept in social theory that asserts that poverty is not only a lack of economic resources but also develops a culture that perpetuates poverty.