When There Is an Expansionary Gap, Inflation Will ________, in Response

question 52

Multiple Choice

When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.

• A)decline; raise; decline
• B)decline; lower; expand
• C)decline; lower; decline
• D)increase; raise; decline

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Definitions:

Shareholders' Profits

The portion of a company's earnings that is distributed to its shareholders.

Local Community

A group of people living in the same place or having a particular characteristic in common, often within a smaller area that facilitates face-to-face interaction.

Blended Family

Two adults and their children. Because of divorce, separation, death, or adoption, the children are the offspring of other biological parents or of just one of the adults raising them.

Natural Family

An alternative term often used to refer to a nuclear family, emphasizing biological relationships within the family unit.