For an Economy Starting at Potential Output, a Decrease in Investment

question 18

Multiple Choice

For an economy starting at potential output, a decrease in investment in the short run results in a(n) :

• A) expansionary output gap.
• B) recessionary output gap.
• C) increase in potential output.
• D) decrease in potential output.

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Definitions:

-Lysis

A suffix indicating the breakdown or decomposition of a substance.

Separation, Breakdown

The process of dividing into parts or the decomposition of substances into simpler forms.

-Genesis

A suffix used in biology and medicine to denote the formation, development, or production of a specific substance or process.

Formation

The process of forming or being formed; the creation of a certain shape or structure.