Which of the Following Is True of a Contractionary Gap

question 89

Multiple Choice

Which of the following is true of a contractionary gap?

• A)It develops when the expected price level is less than the actual price level.
• B)In the long run,this gap will close when resource suppliers negotiate lower resource payments.
• C)It measures the amount by which actual output is greater than the economy's potential output.
• D)In the long run,this gap will close when the short-run aggregate supply curve shifts rightward.
• E)In the long run,this gap will close when the aggregate demand curve shifts rightward.

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Definitions:

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing a measure of consumer benefit.

Walmart

An American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service versus the total amount that they actually do pay.

Equilibrium

The condition where supply and demand in the market are equal, leading to stable prices.