If There Is an Inflationary Gap, Nominal Wages _____, and the _____

question 292

Multiple Choice

If there is an inflationary gap, nominal wages _____, and the _____ curve shifts _____ until the economy reaches long-run equilibrium.

• A) fall; aggregate demand; left
• B) rise; aggregate demand; right
• C) fall; short-run aggregate supply; right
• D) rise; short-run aggregate supply; left

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Definitions:

American Family

A social unit in the United States consisting of individuals related by blood, marriage, or adoption, characterized by diverse structures and cultural practices.

Sustained Deflation

A prolonged period in which the level of consumer prices decreases, indicating a reduction in the inflation rate below zero percent.

World War II

A global conflict that lasted from 1939 to 1945, involving many of the world's nations, including all of the great powers, eventually forming two opposing military alliances: the Allies and the Axis.

Hyperinflation

An extremely high and typically accelerating rate of inflation, leading to a rapid erosion of the real value of local currency and causing economic instability.