Suppose an expansionary gap is closed in the long run.How will nominal GDP and real GDP be affected?
A) Nominal GDP will decline, and real GDP will decline.
B) Nominal GDP will increase, and real GDP will increase.
C) Nominal GDP will increase, but real GDP will decline.
D) Nominal GDP will decline, but real GDP will increase.

Question

Suppose an expansionary gap is closed in the long run.How will nominal GDP and real GDP be affected?  
A) Nominal GDP will decline, and real GDP will decline. 
B) Nominal GDP will increase, and real GDP will increase. 
C) Nominal GDP will increase, but real GDP will decline. 
D) Nominal GDP will decline, but real GDP will increase.

Quizplus · Accepted Answer

The Answer of Suppose an expansionary gap is closed in the long run.How will nominal GDP and real GDP be affected?  
A) Nominal GDP will decline, and real GDP will decline. 
B) Nominal GDP will increase, and real GDP will increase. 
C) Nominal GDP will increase, but real GDP will decline. 
D) Nominal GDP will decline, but real GDP will increase.

Suppose an Expansionary Gap Is Closed in the Long Run