Starting from Potential Output, If Firms Become Less Optimistic About

question 30

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 generate a(n) ________ gap and inflation will ________.

• A)recessionary; increase
• B)recessionary; decrease
• C)expansionary; decrease
• D)expansionary; increase

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Definitions:

Efficient

Efficient describes achieving maximum productivity with minimum wasted effort or expense, often relating to the optimal use of resources to obtain a desired outcome.

Bureaucratic Organization

A structured administrative system governing any large institution, characterized by fixed rules, a hierarchy of authority, and a detailed division of labor.

Bouncers

Security personnel employed at venues like bars, nightclubs, or concerts to ensure safety, enforce rules, and manage entry.

Specialized Task

A job or duty that requires specific skills or expertise, usually assigned to someone proficient in that area.