Make the output gap more positive

Make the output gap more negative

Not affect the output gap

Answer Bank

A$.$ The Chinese government eliminates the tariffs it charges on goods exported from the United States.

B$.$ The implementation of artificial intelligence in manufacturing has led to faster than expected productivity growth, which results in decreasing production costs.

C$.$ A financial crisis makes banks extremely reluctant to take on risky loans without charging an extremely high risk premium.

D$.$ Businesses' confidence about the future of the economy falls, which leads them to scrap planned investment projects.