Suppose a Recessionary Gap Exists and Resource Prices Are NOT

question 77

Multiple Choice

Suppose a recessionary gap exists and resource prices are NOT flexible downward.What will be the effect on the short-run aggregate supply curve?  

• A) It will shift leftward, to return the economy to its potential output. 
• B) It will shift rightward, to return the economy to its potential output. 
• C) It will remain the same, and the recessionary gap will continue. 
• D) It will become the long-run aggregate supply curve.

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Definitions:

Property Rights

are the legal rights to possess, use, and dispose of assets, including real property and intellectual property.

Polluters

Entities, typically businesses or individuals, that introduce contaminants or pollution into the environment.

Earth's Temperature

A measure of the average climatic condition of the Earth, influencing and being influenced by various environmental factors.

Temperature Increase

A rise in the average temperature of the Earth's climate system, often attributed to global warming and human activities.