Assume the Economy Is Initially in Equilibrium Where Potential GDP

question 59

Multiple Choice

Assume the economy is initially in equilibrium where potential GDP is greater than real GDP.If the expected inflation rate,the term structure effect,and the default-risk premium are constant,a decrease in the Bank of Canada's target short-term nominal interest rate will ________ the MP curve and the output gap will become ________.

• A) shift up; smaller
• B) shift up; larger
• C) shift down; smaller
• D) shift down; larger

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Definitions:

Mate Selection

The process individuals use to choose partners with whom to form a reproductive relationship, influenced by various biological, social, and cultural factors.

Gender Differences

Variations in characteristics, behaviors, roles, and expectations based on one's identified or perceived gender.

Traditional Values

Socially inherited norms and beliefs that are passed down through generations, typically emphasizing family roles, religion, and moral views.

Equity Theory

A theory of motivation that suggests fairness in the balance between an individual's inputs and outputs in a relationship contributes to their satisfaction.