Problem
1. (Contractionary Gap) 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?
2. (Expansionary Gap) How does an economy that is experiencing an expansionary gap adjust in the long run?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.