Which of the following occurs when an expansionary gap is closed in the long run by the action of firms? a. Inflation decreases, and unemployment rises. b. Both the equilibrium output and the price level decrease. c. Both the equilibrium output and the price level increase. d. Output decreases, and the price level increases. e. Inflation rises, and unemployment decreases

Which of the following occurs when an expansionary gap is closed in the long run by the action of firms? a. Inflation decreases, and unemployment rises. b. Both the equilibrium output and the price level decrease. c. Both the equilibrium output and the price level increase. d. Output decreases, and the price level increases. e. Inflation rises, and unemployment decreases

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter24: The Aggregate Demand/aggregate Supply Model

Section: Chapter Questions

Problem 48CTQ: If households decide to save a larger portion of their income, what effect would this have on the...

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