Author Question: If the price level in an economy rises and its output level decreases as it gravitates toward its ... (Read 77 times)

panfilo · **on:** Jun 30, 2018

If the price level in an economy rises and its output level decreases as it gravitates toward its potential GDP, then:
a. a policy to manipulate the aggregate supply is being used.
b. an active approach to correcting a recessionary gap is being used.
c. an active approach to correcting an expansionary gap is being used.
d. a passive approach to correcting a recessionary gap is being used.
e. a passive approach to correcting an expansionary gap is being used.

Question 2

When self-correction works to eliminate an expansionary gap, _____.
a. both money wages and real wages increase
b. money wages increase while real wages decrease
c. both money wages and real wages decrease
d. money wages decrease while real wages increase
e. money wages remain unchanged