If a Contractionary Gap Is Cured by Increasing Aggregate Demand

question 15

Multiple Choice

If a contractionary gap is cured by increasing aggregate demand,

• A)both c and e are correct
• B)both d and e are correct
• C)real wages fall because prices rise
• D)prices rise causing real wages to increase
• E)money wages decrease as prices decrease

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Definitions:

Moral Therapy

A psychological approach from the 19th century emphasizing humane treatment and moral discipline to rehabilitate mental illness, focusing on individual patient attention.

North America

A continent entirely within the Northern Hemisphere and almost all within the Western Hemisphere. It is bordered by the Arctic Ocean to the north, the Atlantic Ocean to the east, the Pacific Ocean to the west, and South America and the Caribbean Sea to the south.

Mental Institution

A facility specialized in the treatment and care of individuals with mental health disorders.

Moors

A term historically used to refer to Muslim inhabitants of the Maghreb, the Iberian Peninsula, Sicily, and Malta during the Middle Ages.