As a Contractionary Gap Is Closed in the Long Run

question 115

Multiple Choice

As a contractionary gap is closed in the long run by firms' actions,

• A)nominal and real GDP both decline
• B)nominal and real GDP both increase
• C)nominal GDP increases but real GDP declines
• D)nominal GDP declines but real GDP increases
• E)real GDP increases,but nominal GDP can increase,decrease,or remain the same

---

Definitions:

Intangibles

Non-physical assets such as patents, copyrights, brand recognition, and goodwill that have value but are not physical objects.

Merchandise Trade Balance

The difference between a country's imports and exports of goods.

Tangible Products

Physical items that can be touched, seen, and usually measured, such as books, furniture, and food items.

Finance

The management of large amounts of money, especially by governments or large companies.