Solved

Starting from Potential Output, If Firms Become More Optimistic About

Question 155

Multiple Choice

Starting from potential output, if firms become more optimistic about the future and decide to increase their investment in new capital, then this will generate a(n) ________ gap and inflation will ________.


A) recessionary; increase
B) recessionary; decrease
C) expansionary; decrease
D) expansionary; increase

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q149: Inflation inertia is the result of the

Q150: When actual output equals potential output and

Q151: The self-correcting tendency of the economy means

Q152: Disinflation is<br>A)a substantial reduction in the rate

Q153: High expected inflation leads to _ increases

Q154: If the Fed's monetary policy reaction function

Q156: The aggregate demand curve shows the relationship

Q157: The fact that output gaps will not

Q158: The aggregate demand curve shifts when there

Q159: An upward shift in the Fed's policy