Asked by Nicholas Grenville on Jul 03, 2024
Verified
If an active approach is followed in closing an expansionary gap,_____.
A) the aggregate demand curve would shift rightward
B) the aggregate demand curve would shift leftward
C) the short-run aggregate supply curve would shift rightward
D) the short-run aggregate supply curve would shift leftward
E) there would be a movement up and to the left along the short-run supply curve
Active Approach
A management strategy where decisions are made using discretionary methods to try to outperform the market or a specific benchmark.
Expansionary Gap
Occurs when an economy's actual output is higher than the potential output, often leading to higher inflation.
- Outline the differences between passive and active economic policy approaches.
- Learn the impact of changes in aggregate demand and supply on the state of economic equilibrium.
Verified Answer
TN
Tr??ng Nguy?n QuangJul 07, 2024
Final Answer :
B
Explanation :
To close an expansionary gap using an active approach, the goal is to decrease aggregate demand to reduce inflationary pressures. This is achieved by shifting the aggregate demand curve leftward, not by moving along the supply curve or shifting the supply curve itself.
Learning Objectives
- Outline the differences between passive and active economic policy approaches.
- Learn the impact of changes in aggregate demand and supply on the state of economic equilibrium.
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