Economics Quiz on Recession and Stagflation
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Questions and Answers

What characterizes a recessionary phase?

  • Actual inflation is greater than expected inflation.
  • Actual inflation is less than expected inflation. (correct)
  • Real GDP is equal to potential GDP.
  • Actual inflation is equal to expected inflation.

    • Which of the following describes an inflationary gap?

  • Y < Yp
  • Y is at its natural level.
  • Y > Yp (correct)
  • Y = Yp

    • Stagflation is defined by which of the following characteristics?

  • High price levels and slow economic growth. (correct)
  • Stable prices and fluctuating economic growth.
  • High price levels and rapid economic expansion.
  • Low inflation and high economic growth.

    • What indicates a contractionary gap?

    <p>Y &lt; Yp, contributing to potential unemployment.</p> Signup and view all the answers

    What can contribute to stagflation?

    <p>Negative supply shocks.</p> Signup and view all the answers

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