Suppose Governments Adopted a Hands-Off Policy to the Economy and a Recessionary

question 97

Multiple Choice

Suppose governments adopted a hands-off policy to the economy and a recessionary gap occurred.Which of the following could, in theory, overcome this gap in the long run?  

• A) The only way for the gap to close is for the nominal wage to rise. 
• B) Such a gap could be closed if the nominal wage grew more slowly over time than the price level. 
• C) Only a strong reduction in aggregate demand could close the gap. 
• D) Inflation eventually ends such gaps.

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Definitions:

Israelis And Palestinians

Refers to the two groups primarily involved in the ongoing conflict and peace negotiations in the Middle East, specifically relating to the land areas known as Israel and the Palestinian territories.

Discrimination

The unjust or prejudicial treatment of different categories of people or things, especially on the grounds of race, age, or sex.

Acculturative Stress

Stress resulting from the need to change and adapt a person’s ways to the majority culture.

Nigeria

A country in West Africa, known for its diverse cultures, languages, and significant natural resources, including oil and gas.