Which of the Following Is True of a Recessionary Gap

question 36

Multiple Choice

Which of the following is true of a recessionary gap?

• A)Firms will increase output because Real GDP is below Potential GDP.
• B)Firms will decrease output because the price level is low.
• C)Firms have no incentive to produce more because they can't sell additional output.
• D)Firms have no incentive to produce more because it's very expensive to employ more labour.
• E)It is correctly described as "too much money chasing too few goods."

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A 17th-century English philosopher and physician known as the "Father of Liberalism," who made foundational contributions to modern theories of limited, liberal government.

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