Suppose the Economy Is Initially in Equilibrium Where Real GDP

question 49

Multiple Choice

Suppose the economy is initially in equilibrium where real GDP equals potential GDP and the inflation rate is at the target rate.Other things equal,a housing boom will cause aggregate expenditures to increase,which will result in

• A) an increase in aggregate demand and an increase in the inflation rate.
• B) an increase in aggregate supply and an increase in the inflation rate.
• C) an increase in aggregate demand and a decrease in the inflation rate.
• D) an increase in aggregate supply and a decrease in the inflation rate.

---

Definitions:

Proportion

A part, share, or number considered in comparative relation to a whole, often expressed as a fraction or percentage.

Samples

Selections from a larger population used to estimate characteristics of the whole population.

P-chart

A P-chart is a type of control chart used in quality control to monitor the proportion of defective items in a process over time.

Control Limits

Statistical boundaries set on process control charts that indicate the acceptable range of process variation.