If Real GDP Equals B in the Figure Below, Then

question 93

Multiple Choice

If real GDP equals B in the figure below, then

• A)None of these
• B)there is a structural surplus.
• C)there is a structural deficit.
• D)the difference between government expenditures and tax revenue is equal to zero.
• E)real GDP equals potential GDP.

---

Definitions:

FIFO and LIFO

Inventory valuation methods; FIFO (First In, First Out) assumes that the earliest goods purchased are the first to be sold, while LIFO (Last In, First Out) assumes the reverse.

LIFO Inventory

A method of inventory valuation where the last items added to inventory are the first ones assumed to be sold, typically used to decrease tax liabilities under inflationary conditions.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated by adding new purchases to beginning inventory and then subtracting goods sold.

Periodic Inventory System

An inventory system in which the inventory records are updated only after a physical count has been taken at periodic intervals, usually at the end of an accounting period.