Starting from Potential Output, If Firms Become Less Optimistic About

question 75

Multiple Choice

Starting from potential output, if firms become less optimistic about the future and decide to decrease their investment in new capital, then this will shift the ______ curve to the left and generate ______.

• A) aggregate demand; a recessionary output gap
• B) aggregate supply; a recessionary output gap
• C) aggregate demand; an expansionary output gap
• D) aggregate supply; an expansionary output gap

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Definitions:

Electoral College

A body of electors established by the United States Constitution, formed every four years for the sole purpose of electing the president and vice president.

Political Compromise

The process of making concessions and reaching agreements in the political arena to resolve conflicts or achieve legislative outcomes.

Electors

Individuals selected to represent their state in the United States Electoral College, responsible for formally selecting the President and Vice President.

Separation of Powers

A model of governance where the state's government is divided into branches, each with separate and independent powers and areas of responsibility to prevent any one branch from exercising the core functions of another.