Suppose an Economy Is Experiencing an Expansionary Gap

question 74

Multiple Choice

Suppose an economy is experiencing an expansionary gap.Which of the following best characterizes what happens in such an environment?  

• A) Labour shortages drive up money wages, real wages, and prices. 
• B) An excess supply of labour results due to rising money wages and prices. 
• C) The economy will self-correct as rising money wages decrease faster than rising prices. 
• D) The economy will have excessive involuntary unemployment,
• E)g., cyclical unemployment.

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Definitions:

ESOPs

An Employee Stock Ownership Plan, a program that provides a company's workforce with an ownership interest in the company.

Motivational Value

The inherent capacity of a stimulus, activity, or goal to evoke a motivational response or encourage sustained engagement and effort.

Fringe Benefit Systems

A collection of non-wage compensations provided to employees in addition to their normal wages or salaries.

Job Performance

The level of effectiveness and efficiency with which an individual fulfills their designated job roles and responsibilities.