If We Observe an Economy Adjusting to Potential GDP as Prices

question 196

Multiple Choice

If we observe an economy adjusting to potential GDP as prices fall and real output increases,

• A)it was experiencing an expansionary gap
• B)the correction involves a shift of the AD curve
• C)it was experiencing a recessionary gap
• D)self-correction is not the process that is occurring
• E)there are widespread labor shortages

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Definitions:

Conditioned Stimulus

A stimulus that, through association with an unconditioned stimulus, comes to elicit a conditioned response in classical conditioning.

Unconditioned Stimulus

In classical conditioning, a stimulus that naturally and automatically triggers a response without prior learning.

Psychic Secretions

Bodily reactions that occur in response to psychological stimuli, historically explored in the context of Pavlov's conditioning experiments.

Conditioned Responses

Learned reactions that occur in response to previously neutral stimuli, due to conditioning or association.