Suppose the economy is currently operating at potential output; an expansionary gap may be caused by each of the following except: a positive demand shock. a positive inflation shock. an increase in government spending. an increase in the inflation rate.

Question

Hailee Landry

Business

28 May, 21:17

Suppose the economy is currently operating at potential output; an expansionary gap may be caused by each of the following except: a positive demand shock. a positive inflation shock. an increase in government spending. an increase in the inflation rate.

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Jakob Lloyd · Answer 1

an increase in the inflation rate

Explanation:

Inflation rate: In economics, the term "inflation" is described as a sustained or a constant increase in the nominal or the general price levels of specific services and goods in a particular economy over a time period. However, the common measure or determinant of inflation is considered as the "inflation rate" i. e, the "annualized percentage change" in a common price index, that generally comes out to be the consumer's price index over a specific time period.