Suppose the Economy's Short-Run Equilibrium Is at a Point to the Right

question 86

Multiple Choice

Suppose the economy's short-run equilibrium is at a point to the right of Natural Real GDP.Which of the following statements is true?

• A) The economy is in an inflationary gap.
• B) The economy is in a recessionary gap.
• C) The economy is in long-run equilibrium.
• D) This situation is actually impossible.

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Definitions:

Fee Simple

a type of estate in land, which provides the owner with the most complete form of ownership, including the right to use, lease, or sell the property.

Infinite Duration

A term used to denote a period that does not have an end or limit.

Fixed-Term Tenancy

A type of tenancy under which property is leased for a specified period of time, such as a month, a year, or a period of years; also called a tenancy for years.

Sublet

Refers to the act of a tenant renting out a space they have leased to another party.