If Real GDP Is Less Than Potential GDP, Then the Money

question 287

Multiple Choice

If real GDP is less than potential GDP, then the money wage rate ________, aggregate supply ________ so that the price level ________.

• A)rises; decreases; rises
• B)falls; increases; falls
• C)rises; increases; falls
• D)falls; decreases; rises
• E)does not change; increases; falls

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Definitions:

Speculative Forward Contract

A financial derivative used to speculate on the future price of an asset, involving an agreement to buy or sell the asset at a future date for a price determined today.

Fair Value Hedge

A risk management technique that uses financial instruments to mitigate the risk associated with changes in the fair value of an asset or liability.

Firm Commitment

An agreement between a buyer and an underwriter in which the underwriter guarantees the sale of a certain amount of securities.

Cash Flow Hedge

A hedging strategy used to manage risk associated with variability in cash flows, typically related to interest rates or currency exchange rates.