Which of the Following Would Be Strong Evidence That an Expansionary

question 180

Multiple Choice

Which of the following would be strong evidence that an expansionary gap exists?

• A)Rapid inflation during a period when plant capacity utilization is below average.
• B)A steady price level and a 5 percent unemployment rate.
• C)Help wanted advertising is higher than usual,and the consumer price index is up more than expected.
• D)Inflation has slowed markedly and the Dow Jones average is at record levels.
• E)The number of new unemployment claims has skyrocketed and the price level is falling.

---

Definitions:

Marginal Cost

The cost of producing one additional unit of a product, a key concept in economic theory that helps firms optimize production and pricing strategies.

Average Product

The output produced per unit of a factor of production, calculated by dividing total product by the quantity of the input used in production.

Marginal Product

The additional output resulting from the use of one more unit of a factor of production, holding other factors constant.

Factor Demand

The demand for productive resources (like labor, land, and capital) that businesses need to produce goods and services.