If Potential Output Equals 3,000 and Short-Run Equilibrium Output Equals

question 78

Multiple Choice

If potential output equals 3,000 and short-run equilibrium output equals 3,500, 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:

Anxiety Sensitivity

The fear of anxiety-related sensations, based on beliefs that they may have harmful somatic, social, or psychological consequences.

Cognitive Theorists

Scholars and researchers who study human thought processes, including perception, memory, judgment, and decision making, often in the context of understanding psychological disorders.

Heart Attack

A medical condition occurring when the blood supply to a part of the heart is interrupted, causing heart muscle damage or death.

Obsessive Doubts

Recurrent, persistent thoughts or impulses that are unwanted and cause significant anxiety or distress.