When Potential Output Is Less Than Actual Aggregate Output

question 42

Multiple Choice

When potential output is less than actual aggregate output:

• A)the economy faces an inflationary gap.
• B)the SRAS curve intersects the AD curve to the left of the LRAS curve.
• C)the government should follow an expansionary policy to correct the problem.
• D)a decrease in taxes would solve the problem.

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Definitions:

Uninhibited Reactions

Behavioral responses characterized by the lack of restraint or consideration of societal norms.

Fathers

Refers to male parents who play significant roles in child rearing and development, influencing aspects such as emotional health and social behaviors.

Gender-typing

The process by which children learn about societal expectations, roles, and behaviors associated with their assigned gender.

Physical Play

Activities that engage children (or adults) in physical exercise or movements, such as running, jumping, or climbing, promoting physical health and coordination.