Question

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.

Answer 1

an increase in the inflation rate

Step-by-step 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.