Suppose There Is a Contractionary Gap and the Economy Is

question 96

Multiple Choice

Suppose there is a contractionary gap and the economy is in equilibrium on the SRAS at an output level beyond the economy's long-run real GDP.In the short run,if the government increases spending then

• A)output will decrease but prices will rise.
• B)output will increase but prices will fall.
• C)output and prices will fall.
• D)output and prices will rise.

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Definitions:

Milieu Therapy

A therapeutic approach that utilizes the environment, including people, setting, and activities, to influence a patient's behavior positively.

Social Behaviors

Actions or reactions of individuals in response to external stimuli, which occur in a social context or during interaction with others.

Basic Living Skills

Essential skills for daily living, including personal hygiene, simple cooking, cleaning, and money management.

Erikson's Theory

A psychoanalytic theory developed by Erik Erikson that outlines eight stages of psychosocial development from infancy to adulthood.