During an Inflationary Gap

question 99

Multiple Choice

During an inflationary gap,

• A)real GDP is less than potential GDP.
• B)the aggregate demand curve and the aggregate supply curve intersect at potential GDP.
• C)the aggregate demand curve and the aggregate supply curve do not intersect.
• D)the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP that exceeds potential GDP.
• E)the price level will fall to restore the long-run equilibrium.

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Definitions:

Exosystems

In ecological systems theory, exosystems refer to social settings that indirectly affect an individual's development, even though the person may not be directly involved in such settings.

Economic Processes

The methods and activities through which goods and services are produced, distributed, and consumed in an economy.

Critical Period

A specific timeframe in the development of an organism when it is particularly sensitive to certain environmental stimuli, which can have a long-lasting effect on its future behavior and abilities.

Thalidomide

A drug that caused birth defects when given to pregnant women in the 1950s and 1960s, now used under strict controls for some diseases.