If Real GDP at Full Employment Is $5 Billion While

question 132

Multiple Choice

If real GDP at full employment is $5 billion while current GDP is $6 billion, a(n) _____ exists, and will require a _____ in spending to bring the economy back to full employment.

• A) recessionary gap; increase
• B) recessionary gap; decrease
• C) inflationary gap; increase
• D) inflationary gap; decrease

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Definitions:

Federal Income Taxes

Taxes levied by the IRS on the annual earnings of individuals, corporations, trusts, and other legal entities.

Allocated Tips

Tips that are assigned to an employee by their employer, typically in industries where tipping is customary, and are reported for tax purposes.

Medicare Taxes

Medicare Taxes are federal payroll taxes that fund the Medicare program, typically deducted from an employee's paycheck.

W-2 Form

A tax form issued by employers to employees detailing the employee's annual wages and the amount of taxes withheld from their paycheck, critical for preparing individual income tax returns.