An Inflationary Gap Caused by a Demand Shock Can Be

question 60

Multiple Choice

An inflationary gap caused by a demand shock can be addressed by _____ to _____.

• A) raising government spending; lower the unemployment rate
• B) raising taxes; lower the unemployment rate
• C) lowering government spending; lower the aggregate price level
• D) lowering taxes; lower the aggregate price level

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Definitions:

Predictor Variable

A variable that is used in statistical models to predict or explain changes in a dependent variable.

Adjusted

A term referring to modifications or changes applied to data or statistical measures to account for various factors, enhancing accuracy or comparability.

Adjusted Value

A modification of financial or numerical data to account for changes or for better comparison, often used in accounting and finance.

Explained Variation

The portion of the total variation in a dataset that is accounted for by the model's predictor variables.