Consider an economy starting from a position of full employment. What will happen if, ceteris paribus, 1) consumer confidence in the economy decreases and, at the same time and independently, 2) the prices of some key raw materials suddenly increase? Select one: а. An inflationary gap will result b. The price level for sure will decrease С. The effect on GDP will be uncertain
Consider an economy starting from a position of full employment. What will happen if, ceteris paribus, 1) consumer confidence in the economy decreases and, at the same time and independently, 2) the prices of some key raw materials suddenly increase? Select one: а. An inflationary gap will result b. The price level for sure will decrease С. The effect on GDP will be uncertain
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Consider an economy starting from a position of
full employment. What will happen if, ceteris
paribus, 1) consumer confidence in the economy
decreases and, at the same time and
independently, 2) the prices of some key raw
materials suddenly increase?
Select one:
а.
An inflationary gap will result
b.
The price level for sure will decrease
С.
The effect on GDP will be uncertain
d.
The economy will produce below full employment
GDP
е.
The economy will see a decrease in unemployment](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc309bd96-0168-41e8-99e5-3b3cdd376c57%2F87a6ff95-42c6-493d-957e-c974933b2041%2Flxlb6_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consider an economy starting from a position of
full employment. What will happen if, ceteris
paribus, 1) consumer confidence in the economy
decreases and, at the same time and
independently, 2) the prices of some key raw
materials suddenly increase?
Select one:
а.
An inflationary gap will result
b.
The price level for sure will decrease
С.
The effect on GDP will be uncertain
d.
The economy will produce below full employment
GDP
е.
The economy will see a decrease in unemployment
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