An economy experiencing an expansionary gap:
a. operates in an environment in which labor shortages drive up money wages, real wages, and prices.
b. has an excess supply of labor due to rising money wages and prices
c. will self-correct as rising money wages decrease faster than rising prices.
d. will experience rising money wages and prices but falling real wages.
e. will have excessive involuntary unemployment.
a
You might also like to view...
Americans are creating an enormous amount of solid waste daily—over 4 pounds per person per day. How is the United States coping with this extraordinary problem?
What will be an ideal response?
Which of the following was an observable effect of the North American Free Trade Agreement (NAFTA)?
A. Imports of clothing and textiles into the member countries were diverted away from low-cost suppliers in Asia. B. NAFTA led to a substantial decrease in the volume of trade among the three member countries. C. There was massive shift of jobs toward Mexico. D. Low-cost firms in Canadian manufacturing industries were replaced by the high-cost firms.