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Suppose the Economy Is in Equilibrium with an Output Gap

question 28

Multiple Choice

Suppose the economy is in equilibrium with an output gap equal to zero and the actual inflation rate equals the expected inflation rate.If the economy experiences a negative demand shock,the output gap will ________ and the inflation rate will ________.


Definitions:

Legislative Protections

Laws and regulations designed to protect the rights and welfare of individuals, such as workers or consumers, in various aspects of life and commerce.

Industrial Unions

Labor unions that organize workers across all crafts and trades within an entire industry, rather than according to the specific skills they possess.

Craft Unions

Labor organizations that represent workers in a specific trade or craft, focusing on skills and qualifications unique to that craft as the basis for membership.

Jurisdictional Fights

Conflicts between different unions or sections of unions over the right to represent a certain group of workers or perform specific job tasks.

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