If Real GDP Is Greater Than Potential GDP,the Output Gap

question 20

Multiple Choice

If real GDP is greater than potential GDP,the output gap could be eliminated by
1) an increase in government purchases;
2) an upward shift in the AE curve;
3) a reduction in the money supply.

• A)1 only
• B)2 only
• C)3 only
• D)1 or 2
• E)1 or 2 or 3

---

Definitions:

Outstanding Shares

The total number of shares of a corporation's stock that are currently owned by all its shareholders, including shares held by institutional investors and restricted shares held by insiders and company officers.

Stockholders

Individuals or entities that own shares in a corporation, thereby having ownership interest.

Authorized Shares

The highest quantity of shares that a company is authorized to issue according to its articles of incorporation.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock and often pays dividends at a fixed rate.