If there is currently a recessionary gap: a. The price level ...

[kaid0807]

If there is currently a recessionary gap:
 a. The price level will tend to rise.
  b. Real output will tend to rise.
 c. Both a. and b. will occur.
 d. None of the above will occur.

Question 2

Suppose an economy is in equilibrium. Also suppose that consumer expectations change as the threat of war increases the likelihood of an increase in taxes. This would result in:
 a. an increase in equilibrium income.
  b. no change in equilibrium income.
  c. a downward shift of the aggregate supply curve.
  d. a decrease in equilibrium income.
  e. a change in the slope of the aggregate supply curve.

[cadimas]

Answer to Question 1

b

Answer to Question 2

d

[kaid0807]

Correct answers!

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