Approaching a business cycle trough we find actual real GDP ________ natural real GDP,so inflation is ________.
A)below,slowing down
B)below,speeding up
C)above,slowing down
D)above,speeding up

Question

Quizplus · Accepted Answer

Approaching a business cycle trough, actual real GDP is below natural real GDP. This means that there is a slack in the economy, with resources not being fully utilized. This tends to put downward pressure on prices, slowing down inflation. Therefore, option A is the correct choice.

Approaching a Business Cycle Trough We Find Actual Real GDP