Which of the Following Occurs When an Expansionary Gap Is

question 22

Multiple Choice

Which of the following occurs when an expansionary gap is closed in the long run by the action of firms?

• A)Output decreases,and the price level increases.
• B)Inflation decreases,and unemployment rises.
• C)Both the equilibrium output and the price level increase.
• D)Both the equilibrium output and the price level decrease.
• E)Inflation rises,and unemployment decreases

---

Definitions:

Owner's Equity

The residual interest in the assets of a company after deducting liabilities, representing the owner's stake.

Total Assets

Represents the sum of all resources owned by a company, including cash, inventory, property, and equipment, that are expected to provide future economic benefits.

Period Of Time

A specific duration or length of time during which an event occurs or conditions exist.

Individual Asset

A singular item of value owned by an entity, such as cash, investments, equipment, or property.