Which of the Following Statements About Output Gaps Is True

question 127

Multiple Choice

Which of the following statements about output gaps is true?

• A)When actual GDP is below potential GDP,there is upward pressure on wages.
• B)When actual GDP is below potential GDP,there is upward pressure on output prices.
• C)When actual GDP is above potential GDP,there is downward pressure on wages.
• D)When actual GDP is above potential GDP,there is downward pressure on output prices.
• E)When actual GDP is above potential GDP,there is upward pressure on wages.

---

Definitions:

Competitive Market

A market environment where numerous producers and consumers interact, leading to price competition and variety in products.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a resource, such as labor or capital, in the production process.

Purely Competitive

Characterizes a market structure where many competitors sell identical products, ensuring no single seller can influence market prices.

Labor Input

Labor input is the amount of work provided by employees or workers, contributing to the production of goods and services within an economy or firm.