Exhibit 26-1 -If Real GDP Equals C in Exhibit 26-1

question 26

Multiple Choice

Exhibit 26-1
-If real GDP equals C in Exhibit 26-1,

• A)the structural surplus is equal to S₂ - S₁.
• B)the cyclical surplus is equal to S₂.
• C)the cyclical surplus is equal to S₂ - S₁.
• D)there is no structural surplus.
• E)there is a balanced budget.

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Definitions:

Increasing-cost Industry

An industry in which the costs of production increase as the industry expands due to factors like limited resources or higher input prices.

Long-run Supply

The time period in economics during which all factors of production and costs are variable, allowing firms to adjust all inputs in response to market conditions.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that suppliers are willing to produce and sell.

Decreasing-cost Industry

An industry where costs per unit decline as the industry's output increases due to economies of scale.