An Increase in Potential Output Will Result In

question 57

Multiple Choice

An increase in potential output will result in:

• A)a temporary expansionary gap.
• B)a higher rate of inflation eventually.
• C)a temporary recessionary gap.
• D)an immediate shift upward in the short-run aggregate supply curve.

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Definitions:

Price Ceiling

A government-imposed limit on the price charged for a product, intended to keep prices low for consumers.

Price Support

Government interventions or policies designed to maintain the market price of a commodity or product at a certain level.

Government Policy

Actions and strategies that governments enact to achieve economic, social, or political objectives.

Consumer Surplus

The distinction between the price consumers intend to pay for a product or service and the price they actually pay.