A Recessionary Output Gap Is Characterized by

question 2

Multiple Choice

A recessionary output gap is characterized by

• A)rising prices.
• B)constant prices.
• C)real output that varies one-for-one with aggregate demand.
• D)real GDP exceeding potential output.
• E)real GDP falling below potential output.

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Definitions:

Business Use

The utilization of goods, services, or assets for the purpose of generating income or benefits in a business context.

Half-Year Convention

The Half-Year Convention is a method for calculating depreciation in which all assets acquired during a year are considered to have been acquired at the midpoint of the year.

Real Property

Land and anything permanently affixed to it, such as buildings, fences, and those things attached to the buildings.

MACRS

The Modified Accelerated Cost Recovery System, a method of depreciation in the U.S. for tax purposes, allowing businesses to recover investments in certain property over time.