Suppose Real GDP Exceeds Potential Real GDP

question 267

Multiple Choice

Suppose real GDP exceeds potential real GDP. If the government decreases its expenditures on goods and services, then real GDP and the price level _ .

• A) decreases; falls
• B) increases; rises
• C) increases; falls
• D) decreases; rises

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Definitions:

Balance Sheet

A financial statement that provides a snapshot of a company's financial position at a specific point in time, showing assets, liabilities, and equity.

Assembly Line Wages

Wages paid to workers who are involved in the operations of an assembly line, typically in a manufacturing process.

Raw Materials

The basic materials that are processed and converted through manufacturing into finished goods.

Factory Utilities

Costs incurred for utilities in a manufacturing setting, such as electricity, gas, and water, essential for production operations.