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.

What is consumer surplus? Why would policy makers be interested in consumer surplus?

What will be an ideal response?

Which of the following could be responsible for the depreciation of a country's currency?

A. The country expands its tourist industry. B. The country experiences a sudden drop in the rate of inflation while other nations do not. C. Speculators anticipate economic growth in that nation. D. The country defaults on bonds held by foreigners.