The amount by which actual output falls short of

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Chapter 22 / Exercise 36
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120.The amount by which actual output falls short of potential output is called an contractionary gap.a.Trueb.FalseANS: A
PTS:1DIF:HardNAT: AnalyticLOC:Aggregate demand and aggregate supplyTOP:Closing a Contractionary Gap121.The amount by which actual output falls short of potential output is called an expansionary gap.
PTS:1DIF:HardNAT: AnalyticLOC:Aggregate demand and aggregate supplyTOP:Closing a Contractionary Gap122.Wage agreements may cause costs to be __________ flexible than prices so that __________ in the price level cause __________ in aggregate quantity supplied.
PTS:1DIF:HardNAT:Reflective ThinkingLOC:Aggregate demand and aggregate supplyTOP:Closing a Contractionary Gap123.Suppose that the actual and expected price levels are initially equal, and that the expected price level rises. Which of the following will occur over the long run? (Hint: Recall the actualprice level is on the vertical axis.)
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Chapter 22 / Exercise 36
Exploring Economics
Sexton
Expert Verified
PTS:1DIF:HardNAT:Reflective ThinkingLOC:Aggregate demand and aggregate supplyTOP:Closing a Contractionary Gap124.If the expected price level exceeds the actual price levela.the inflation rate is negativeb.the inflation rate is positivec.production becomes less attractive to firmsd.production becomes more attractive to firmse.the short-run aggregate supply curve is negatively slopedANS: C
PTS:1DIF:ModerateNAT: AnalyticLOC:Aggregate demand and aggregate supplyTOP:Closing a Contractionary Gap125.If the expected price level exceeds the actual price level,
PTS:1DIF:ModerateNAT: AnalyticLOC:Aggregate demand and aggregate supplyTOP:Closing a Contractionary Gap

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