Suppose That the Economy Is Experiencing Both an Inflationary Gap

question 12

Multiple Choice

Suppose that the economy is experiencing both an inflationary gap and a budget surplus.Which of the following is true?

• A)Attempts to balance the budget would be pro-cyclical.
• B)Attempts to balance the budget would be counter-cyclical.
• C)Attempts to balance the budget would eliminate or reduce the size of the gap.
• D)Reducing the size of the gap would reduce the surplus.

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Definitions:

Task Forces

Special groups formed temporarily to focus on addressing a specific issue or to perform a particular task or activity.

Temporarily Organized

Refers to a group or project set up for a limited time period to achieve a specific goal, after which it may be disbanded.

Punctuated Equilibrium

A theory in evolutionary biology suggesting that species evolve rapidly during short periods of radical change, punctuating long periods of minimal change.

Five Phases

Typically refers to a series of steps or stages in a particular process or model, though the specific context can vary widely.