A Short-Run Equilibrium with an Output Gap of Zero Implies

question 189

Multiple Choice

A short-run equilibrium with an output gap of zero implies

• A) zero inflation in the near future.
• B) the rate of inflation will remain the same.
• C) the rate of inflation will rise.
• D) the rate of inflation will fall.
• E) firms have no incentive to raise the prices of their goods and services.

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