If Potential Output Equals 8,000 and Short-Run Equilibrium Output Equals

question 81

Multiple Choice

If potential output equals 8,000 and short-run equilibrium output equals 8,500, there is a(n) ________ gap and the Federal Reserve must ________ real interest rates in order to close the gap.

• A)recessionary; raise
• B)recessionary; reduce
• C)recessionary; not change
• D)expansionary; raise

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Definitions:

Color Deficiencies

Visual impairments in which an individual cannot perceive color differences, commonly referred to as color blindness, which can range from mild to severe.

Light Waves

Electromagnetic waves that are visible to the human eye.

Sound Waves

Vibrations that travel through the air or another medium and can be heard when they reach an ear.

Wavelength

The distance between successive crests of a wave, especially points in a sound wave or electromagnetic wave.