If Real Output Is Currently Less Than the Natural Level

question 108

Multiple Choice

If real output is currently less than the natural level of real output,what impact will an increase in aggregate demand have on the market?

• A)It will make the current recessionary gap smaller.
• B)It will make the current inflationary gap smaller.
• C)It will make the current inflationary gap larger.
• D)It will make the current recessionary gap larger.

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Definitions:

Intelligence

The capacity to obtain and utilize knowledge and abilities.

Informal Reasoning

The process of reasoning without strict adherence to formal rules and structures, often used in everyday problem-solving.

Formal Reasoning

The process of thinking in a logical and systematic manner, often associated with problem-solving and decision-making in structured contexts.

Restructuring

The act of changing the organization, operation, or structure of something to improve efficiency or outcome.