Over short periods of time,producers typically vary production at preset prices to meet changes in demand.This means that when economy-wide demand decreases,actual output ________ potential output and creates a(n)________;and when economy-wide demand increases actual output ________ potential output and creates a(n)_________.

Question

Quizplus · Accepted Answer

When economy-wide demand decreases, actual output falls below potential output and creates a recessionary gap. When economy-wide demand increases, actual output rises above potential output and creates an expansionary gap.

Over Short Periods of Time,producers Typically Vary Production at Preset