Refer to Figure 10

question 106

Multiple Choice

Refer to Figure 10.3.If full-employment GDP is $600 billion and the economy is on AD₁,

• A)A recessionary gap exists,and AD must increase by less than $100 billion to eliminate it.
• B)A recessionary gap exists,and AD must increase by more than $100 billion to eliminate it.
• C)An inflationary gap exists,and AD must increase by $100 billion to eliminate it.
• D)An inflationary gap exists,and AD must increase by more than $100 billion to eliminate it.

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Definitions:

Gross Profit

The difference between revenue and the cost of goods sold before deducting overheads, payroll, taxes, and interest payments.

Sales Returns

Sales Returns are transactions where customers return previously purchased merchandise, leading to a reduction in sales revenue for the seller.

Office Supplies

Items used in offices such as paper, pens, and other consumables necessary for day-to-day operations.

Departmental Income Statements

are financial statements that report the income, expenses, and net income of individual departments within a company.