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Contractionary Gap with Unemployment, Price Level, and Wages

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What does a contractionary gap imply about the actual rate of unemployment relative to the natural rate?

What does it imply about the actual price level relative to the expected price level?

What must happen to real and nominal wages in order to close a contractionary gap?

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Solution Summary

Actual Price Levels are briefly mentioned. The expert examines the contractionary gap with unemployment, price level and wages.

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What does a contractionary gap imply about the actual rate of unemployment relative to the natural rate?
It implies that the actual rate of ...

Solution provided by:
Manal Elkhoshkhany, MBA
Education
  • BA, Ain Shams University, Cairo Egypt
  • MBA, California State University, Sacramento
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