Suppose a Passive Approach to Policy Is Followed

question 4

Multiple Choice

Suppose a passive approach to policy is followed.How would an expansionary gap eventually close?  

• A) Restrictive fiscal policy would be used. 
• B) Restrictive monetary policy would be used. 
• C) Inflation would cure the problem because the price level in an expansionary gap is lower than firms and workers had expected. 
• D) Inflation would cure the problem because the price level in an expansionary gap is higher than firms and workers had expected.

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Definitions:

Research Design

A systematic plan outlining how a research project is conducted, including the methods and procedures used to collect and analyze data.

Consumer Population

The group of individuals or entities that are potential or actual buyers of products and services in a given market.

Contextual Factors

Various external elements that can influence the performance or outcomes of a process, strategy, or system, such as economic, social, or technological environments.

Microexpressions

Involuntary facial expressions that occur fleetingly and reveal genuine emotions.