If Real GDP Is Greater Than Potential GDP, We Would

question 129

Multiple Choice

If real GDP is greater than potential GDP, we would expect

• A)the money wage rate to fall.
• B)the money wage rate to rise.
• C)potential GDP to increase.
• D)potential GDP to decrease.
• E)the expected future inflation rate to decrease.

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Definitions:

Employment Contract

A formal agreement between an employer and an employee outlining the terms of employment, including responsibilities, compensation, and duration.

Loanable Funds

The money available in the financial system for lending to individuals, businesses, and the government.

Equilibrium Interest Rate

The interest rate at which the demand for funds equals the supply of funds in the market, bringing the financial market into balance.

Supply Curve

A graph showing the relationship between the price of a good and the quantity of the good that suppliers are willing and able to sell, generally depicted as upward sloping.