Multiple Choice
Suppose the economy is in equilibrium with an output gap equal to zero and the actual inflation rate equals the expected inflation rate.If the economy experiences a negative demand shock,real GDP will become ________ potential GDP and the economy will move to the ________ along an existing Phillips curve.
A) greater than; right
B) greater than; left
C) less than; right
D) less than; left
Correct Answer:
Verified
Correct Answer:
Verified
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