When the Unemployment Rate Is Less Than the Natural Unemployment

question 6

Multiple Choice

When the unemployment rate is less than the natural unemployment rate, real GDP is _______ than potential GDP and the output gap is _______.

• A)greater; positive
• B)greater; equal to zero
• C)smaller; positive
• D)smaller; negative
• E)greater; negative

---

Definitions:

End-Of-Period Accrual

Accounting adjustments made at the end of accounting periods to record revenues earned and expenses incurred but not yet recorded.

Sales Returns

Transactions where customers return previously purchased merchandise, leading to the reversal of revenue and reduction in sales figures.

Gross Accounts Receivable

The total amount owed to a company by its customers before deducting any allowance for doubtful accounts.

Accrual Accounting

A financial recording approach in which earnings and expenditures are documented upon being accrued, without considering the timing of the associated cash movements.