In the Short-Run, an Output Gap Occurs Because

question 164

Multiple Choice

In the short-run, an output gap occurs because

• A) there is insufficient demand for goods and services.
• B) there is insufficient supply of goods and services.
• C) wages and prices are fully flexible.
• D) wages and some prices have not adjusted sufficiently to maintain output at its potential level.

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Definitions:

Shareholders' Equity

The residual interest in the assets of an entity after deducting liabilities, representing the net worth contributed by the owners.

Liabilities

Financial obligations or debts owed by a company to external parties, creditors, or suppliers that must be settled over time.

Shareholders' Equity

The residual interest in the assets of a company after subtracting liabilities, representing ownership equity.

Total Assets

The sum of all current and noncurrent assets owned by a company, reflecting its overall value.