Author Question: If we observe an economy adjusting to potential GDP as prices fall and real output increases, we can ... (Read 201 times)

karateprodigy · **on:** Jun 30, 2018

If we observe an economy adjusting to potential GDP as prices fall and real output increases, we can conclude that _____.
a. the economy was experiencing an expansionary gap
b. there is a labor surplus
c. the economy was experiencing a recessionary gap
d. self-correction is not the process that is occurring
e. there are widespread labor shortages

Question 2

The reason why self-correction works to close a recessionary gap is because:
a. a labor shortage causes wages to increase.
b. a labor surplus causes wages to increase.
c. a labor shortage causes wages to fall.
d. a labor surplus causes wages to fall.
e. a labor surplus causes price to fall.