An expansionary gap is closed in the long run by a(n):
a. rightward shift of the short-run aggregate supply curve.
b. leftward shift of the short-run aggregate supply curve.
c. movement to the right along a fixed short-run aggregate supply curve.
d. increase in aggregate demand.
e. decrease in aggregate demand.
QUESTION 2Planned investment expenditures will eventually decrease after:
a. the money supply decreases.
b. the demand for money decreases.
c. the interest rate falls.
d. the Fed buys government securities.
e. business managers become more optimistic about future market conditions for their products.
QUESTION 3An expansionary gap in the short-run results in:
a. lower resource prices in the long run.
b. unemployment in the long run.
c. a recessionary gap in the long run.
d. cost-push inflation in the long run.
e. demand-pull inflation in the long run.
QUESTION 4All other things constant, if the interest rate decreases on account of a monetary policy:
a. the demand for investment curve shifts to the right.
b. the demand for investment curve shifts to the left.
c. there is a downward movement along the demand for investment curve.
d. there is an upward movement along the demand for investment curve.
e. real GDP decreases.
QUESTION 5The more the short-run output exceeds an economy's potential, _____.
a. the smaller the expansionary gap
b. the greater the upward pressure on the price level
c. the larger the recessionary gap
d. the greater the downward pressure on the price level
e. the lesser the demand for resources
QUESTION 6All other things constant, when the interest rate increases:
a. the demand for investment curve shifts to the right.
b. the demand for investment curve shifts to the left.
c. there is a movement downward along the demand for investment curve.
d. there is a movement upward along the demand for investment curve.
e. GDP increases.
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