If an economy's actual GDP exceeds its potential GDP, _____. a. ...

[dollx]

If an economy's actual GDP exceeds its potential GDP, _____.
 a. wages and prices must fall
 b. self-correcting forces will shift the SRAS curve to the left
  c. self-correcting forces will shift the AD curve to the left
  d. inflation will occur when AD shifts to the left
 e. unemployment is likely to be unusually high

Question 2

An economy experiencing an expansionary gap:
 a. operates in an environment in which labor shortages drive up money wages, real wages, and prices.
  b. has an excess supply of labor due to rising money wages and prices.
 c. will self-correct as rising money wages decrease faster than rising prices.
 d. will experience rising money wages and prices but falling real wages.
 e. will have excessive involuntary unemployment.

[gcook]

Answer to Question 1

b

Answer to Question 2

a

[dollx]

Excellent

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