Which of the following is true of a recessionary gap?
a. It develops when the expected price level is less than the actual price level.
b. In the long run, this gap closes when resource suppliers negotiate lower resource payments.
c. It measures the amount by which actual output is greater than the economy's potential output.
d. In the long run, this gap closes when the short-run aggregate supply curve shifts rightward.
e. In the long run, this gap closes when the aggregate demand curve shifts rightward.
Question 2
Identify the correct statement about changes in money supply.
a. A decrease in money supply causes interest rates to fall.
b. A decrease in money supply causes investment spending to increase.
c. A decrease in money supply causes gross domestic product to increase.
d. A decrease in money supply causes investment spending to decrease.
e. A decrease in money supply causes aggregate expenditure to increase.
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