An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.

In the short-run, real GDP can be greater than or less than potential GDP because in the short run the

A) money wage rate is fixed. B) quantity of capital is fixed. C) full-employment level of employment is fixed. D) price level is fixed.

Interest rates are higher the

A) shorter the duration of the loan. B) greater the risk. C) larger the amount of the loan, holding other things constant. D) lower the inflation rate.