An Inflationary Output Gap Would Generate Which of the Following

question 132

Multiple Choice

An inflationary output gap would generate which of the following conditions in the economy?

• A)Firms are making low profits.
• B)Workers have relatively more bargaining power with employers.
• C)There is an unusually small demand for labour.
• D)There is downward pressure on wages.
• E)There is much idle capacity.

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Definitions:

Useful Life

The estimated period over which an asset is expected to be functional and economically useful.

Commercial Substance

Involves a situation where the future cash flows of a business are expected to change significantly as a result of a transaction.

Accumulated Depreciation

The total amount of a tangible asset's cost that has been expensed since it was put into use.

Recorded Cost

The cost of an asset as it appears in a company's books or financial statements, reflecting the original cost of acquisition.