When an Expansionary Gap Exists,the Rate of Inflation Will

question 102

Multiple Choice

When an expansionary gap exists,the rate of inflation will

• A) tend to rise.
• B) tend to fall.
• C) remain unchanged.
• D) become disinflation.
• E) shift the IA line downward.

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Definitions:

Labor Demand

The total amount of workers that employers are willing and able to hire at a given wage rate in a particular market or industry.

Wage Rate

The amount of money paid to a worker per unit of time, serving as compensation for labor services.

Capital Stock

The total amount of physical and financial assets owned by a business or economy, crucial for production capacity.