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If We Observe an Economy Adjusting to Potential GDP as Prices

Question 196

Multiple Choice

If we observe an economy adjusting to potential GDP as prices fall and real output increases,


A) it was experiencing an expansionary gap
B) the correction involves a shift of the AD curve
C) it was experiencing a recessionary gap
D) self-correction is not the process that is occurring
E) there are widespread labor shortages

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