In a Self-Correcting Model of the Economy,recessionary Gaps Are Eventually

question 104

Multiple Choice

In a self-correcting model of the economy,recessionary gaps are eventually eliminated by

• A) rising inflation and rising real interest rates.
• B) falling inflation and falling real interest rates.
• C) increasing potential output.
• D) decreasing potential output.
• E) government policy.

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Definitions:

MR

Marginal Revenue, which is the additional income generated from selling one more unit of a good or service.

MC

An abbreviation for Marginal Cost, referring to the expense associated with producing an additional unit of output.

Capacity

The maximum output that a business, plant, or facility can produce under normal conditions.

Increase Traffic

Refers to strategies and actions designed to attract more visitors to a website or through a physical location.