Which of the Following Is True of an Expansionary Gap

question 1

Multiple Choice

Which of the following is true of an expansionary gap?

• A)It develops when the expected price level exceeds the actual price level.
• B)In the long run,this gap will close when resource suppliers negotiate lower resource payments.
• C)It measures the amount by which actual output falls short of the economy's potential.
• D)In the long run,this gap will close when the short-run aggregate supply curve shifts rightward.
• E)In the long run,this gap will close when resource suppliers negotiate higher resource payments.

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