In a Diagram of Aggregate Demand and Supply Curves,the GDP

question 81

Multiple Choice

In a diagram of aggregate demand and supply curves,the GDP gap is measured as the

• A)Horizontal distance between the equilibrium output and the full-employment output.
• B)Vertical distance between the equilibrium price and the price at which the aggregate demand would intersect aggregate supply at full employment.
• C)Horizontal distance between the aggregate demand necessary to achieve full employment and the aggregate demand curve at equilibrium output.
• D)Vertical distance between the equilibrium output and the full-employment output.

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Definitions:

Tax

A necessary tax or other charge placed on individuals by a government agency, with the purpose of generating revenue for government operations and miscellaneous public outlays.

Tax Revenue

The income that is collected by governments through taxation, which supports public spending and services.

Government

The organization, or system by which a community or nation is governed, responsible for creating and enforcing laws.

Consumer Surplus

The offset between what customers are willing and able to pay for a service or product and what they actually expend.