If the Current Price Level in the Goods and Services

question 88

Multiple Choice

If the current price level in the goods and services market is higher than what was expected,output will be

• A)at the economy's long-run capacity.
• B)below the economy's long-run capacity.
• C)above the economy's long-run capacity.
• D)equal to the expected rate of inflation minus net exports.

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Definitions:

Price Level

A measure of the average of current prices across the entire spectrum of goods and services produced in the economy.

Money Demand

The desire to hold cash or cash-equivalents and the quantity of money that individuals or businesses want to hold.

Government Expenditures

The total amount of money that a government spends on public services, infrastructure, defense, and welfare programs.

Business Cycle

The fluctuations in economic activity that an economy experiences over a period of time, characterized by periods of boom and recession.