Suppose an Expansionary Gap Is Closed in the Long Run

question 8

Multiple Choice

Suppose an expansionary gap is closed in the long run.How will nominal GDP and real GDP be affected?  

• A) Nominal GDP will decline, and real GDP will decline. 
• B) Nominal GDP will increase, and real GDP will increase. 
• C) Nominal GDP will increase, but real GDP will decline. 
• D) Nominal GDP will decline, but real GDP will increase.

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Definitions:

External Validity

The extent to which the findings of a study can be generalized to other settings, populations, and time periods beyond the original conditions of the study.

Independent Variable

In research and experimentation, it is the variable that is manipulated or changed to observe its effect on a dependent variable.

ABAB Design

A research method involving repeated measurements over time where conditions are alternated to observe the effect of an intervention.

Single-subject Experiment

A research design in which interventions are tested on a single individual, allowing for detailed observation of effects over time and control over variables affecting the outcome.