A Recessionary Output Gap Implies That

question 13

Multiple Choice

A recessionary output gap implies that

• A)there is excess demand for most factors of production .
• B)the intersection of AD and AS occurs where real GDP exceeds potential output.
• C)the economy's resources are being used at more than their normal capacity.
• D)the demand for all factor services will be relatively low.
• E)there is upward pressure on wages.

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Definitions:

Cost-Reimbursement Contract

A type of contract where the purchaser agrees to pay the supplier for all actual costs incurred plus a fee or profit.

Selling Price

The amount of money consumers pay to purchase a product or service, set by sellers based on costs, market demand, and competition.

Allocation System

A method of distributing resources, costs, or revenues among various departments, products, or activities based on predetermined criteria.

Cost Control

The practice of managing and reducing business expenses through efficient use of resources.