To Achieve Long-Run Equilibrium in an Economy with a Recessionary

question 37

Multiple Choice

To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:

• A)increase.
• B)decrease.
• C)not change.
• D)either increase or decrease depending on the relative shifts of AD and AS.

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Definitions:

Isolation

The process or condition of separating or being separated from a system or environment, often for safety, such as electrical isolation to prevent shock.

Turns Ratio

The ratio of the number of turns in the primary winding of a transformer as compared to the turns of wire in the secondary winding.

Secondary Voltage

The output voltage of a transformer or another type of electrical machine, which is induced by the primary voltage.

Primary

In electrical systems, the initial or main input side of a transformer or circuit.