Which of the Following Would Be a Direct Result of Real

question 9

Multiple Choice

Which of the following would be a direct result of real GDP being above potential GDP?

• A)Firms would raise their prices and there would be a subsequent rise in inflation.
• B)Firms would lower their prices and there would be a subsequent decrease in inflation.
• C)Government spending would decline.
• D)None of the above would be a result.
• E)Real GDP can never be above potential GDP.

---

Definitions:

Cross-Sectional

A type of study or analysis that examines a population or a specific outcome at a single point in time.

Longitudinal

A type of study or analysis that follows the same subjects over a period of time to observe changes or outcomes.

Cross-Sectional Study

A research method that involves observing a defined population at a single point in time or over a short period, making it possible to examine correlations and infer potential causations.