Suppose an Economy Has an Upward-Sloping AS Curve and an Inflationary

question 24

Multiple Choice

Suppose an economy has an upward-sloping AS curve and an inflationary gap equal to $10 billion.If AD shifts to the left by $10 billion,

• A)Real output will fall by less than $10 billion.
• B)Real output will fall by $10 billion.
• C)The inflationary gap will be eliminated.
• D)A recessionary gap will be createD.The AD curve shifts to the left,but the new macro equilibrium will occur at a lower price level.So there will still be an inflationary GDP gap,though it will be smaller.

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Definitions:

Rehearsal

A strategy for remembering that usually involves continuing to actively process to-be-remembered material, like repeating it to oneself.

Working Memory

The part of the cognitive machinery that holds information one is actively thinking about at the moment; also referred to as short-term memory.

Retrieval

What we usually mean by remembering, that is, getting information out of mental storage so we can use it.

Script

A schematic representation of the typical features of an event and the order in which they happen.