If We Observe an Economy Adjusting to Potential GDP as Prices

question 163

Multiple Choice

If we observe an economy adjusting to potential GDP as prices fall and real output increases,

• A)it was experiencing an expansionary gap
• B)the correction involves a shift of the AD curve
• C)it was experiencing a contractionary gap
• D)self-correction is not the process that is occurring
• E)there are widespread labor shortages

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Definitions:

Common Law

A legal system based on customs and court rulings, as opposed to statutory laws enacted by a legislative body.

Predominant Purpose

The main intent or objective behind a contract or transaction, often used to interpret the nature of the agreement.

Auto-parts Manager

A professional responsible for overseeing the operations and inventory of an auto-parts store or department.

Promissory Estoppel

A legal principle that prevents a party from withdrawing a promise considered binding, not because of a formal contract, but because it was relied upon by another to their detriment.