The Fiscal Policy to Counter an Inflationary Gap Is A(n)

question 50

Multiple Choice

The fiscal policy to counter an inflationary gap is a(n)

• A) positive aggregate supply shock.
• B) negative aggregate supply shock.
• C) positive aggregate demand shock.
• D) negative aggregate demand shock.
• E) expansionary fiscal policy.

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Definitions:

Isoquants

Isoquants are curves representing combinations of inputs that yield the same level of output in production theory.

MRTS

Marginal Rate of Technical Substitution, the rate at which a firm can substitute one input for another while keeping the level of output constant.

Labor

The human effort, both physical and mental, that is used in the production of goods and services.

Isoquants

Curves on a graph that represent different combinations of inputs that produce the same level of output, used in production theory.