Please answer: (1) How will the economy recover from a recessionary gap? A. Aggr
ID: 1253743 • Letter: P
Question
Please answer:(1) How will the economy recover from a recessionary gap?
A. Aggregate demand will increase.
B. Short run aggregate supply will fall because resource costs will be bid up.
C. Aggregate demand will fall.
D. Short run aggregate supply will increase because resource costs will fall.
(2) Why will SRAS eventually fall when the economy is in an inflationary gap?
A. Wealth is increasing so people buy more.
B. New energy saving technologies become available.
C. Resource markets are tight so the costs of resources are bid up.
D. Consumer confidence will be very low.
Explanation / Answer
1. D. short run aggregate supply will increase because resource costs will fall 2. C resource markets are tight so the cost of resources are bid up