The built-in long-run adjustment process that eliminates a recessionary gap (Y < YP) in the economy requires that:
A) growth in wages and production costs slow down over time.
B) the inflation rate declines over time.
C) aggregate demand and output Y increase along the AD function over time.
D) all of the above.
Correct Answer:
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Q58: Q59: Q60: Which of the following statements is false? Q61: If an output gap exists in the Q62: The long-run adjustments that eliminate recessionary and Q64: When an AD shock raises equilibrium output Q65: The long-run self-correcting mechanism that eliminates an Q66: Suppose the economy is initially at full-employment Q67: Q68: Unlock this Answer For Free Now! View this answer and more for free by performing one of the following actions Scan the QR code to install the App and get 2 free unlocks Unlock quizzes for free by uploading documents
A)
