Use the Following to Answer Questions

question 340

Multiple Choice

Use the following to answer questions :
Figure: Output Gap
-(Figure: Output Gap) Look at the figure Output Gap. If the economy is producing at Y₂, then it has a(n) _____ gap, as _____ real GDP exceeds _____ real GDP, and the Federal Reserve should use _____ monetary policy.

• A)recessionary; actual; potential; expansionary
• B)recessionary; potential; actual; expansionary
• C)inflationary; actual; potential; contractionary
• D)inflationary; potential; actual; contractionary

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Definitions:

Global Development

The process of economic, social, and political improvements that contribute to a better quality of life for people across different countries and regions around the world.

Rich

Possessing substantial wealth or resources, enabling a person to live a lifestyle of financial comfort and abundance.

Poor

A term used to describe individuals or groups who lack financial resources or sufficient income to meet basic living necessities.

Newly Industrialized Countries

Countries that are transitioning from primarily agricultural to primarily manufacturing and industrial activities.