Use the Following to Answer Questions

question 231

Multiple Choice

Use the following to answer questions :
Figure: Output Gap
-(Figure: Output Gap) Look at the figure Output Gap. If the economy is at Y₁ as a result of expansionary monetary policy and no further policy is implemented, in the long run nominal wages will _____ and shift the short-run aggregate supply curve to the _____, which will _____ real output.

• A)increase; left; decrease
• B)increase; right; increase
• C)decrease; left; decrease
• D)decrease; right; increase

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Definitions:

Collusion

An agreement, usually secretive, between two or more parties to limit competition and manipulate market conditions in their favor.

Outcome

The result or effect of an action, situation, or event, typically one that is important or considered significant.

Duopoly

Duopoly is a market structure characterized by two firms controlling the majority of the market share, often leading to strategic behavior in price and output decisions.

Profit

The financial gain achieved when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.