Use the Figure Below to Answer the Following Questions

question 75

Multiple Choice

Use the figure below to answer the following questions.

Figure 26.3.5
-Refer to Figure 26.3.5. At point B the economy has

• A)an inflationary gap with real GDP in excess of potential GDP.
• B)an inflationary gap with real GDP less than potential GDP.
• C)a recessionary gap with real GDP in excess of potential GDP.
• D)a recessionary gap with real GDP less than potential GDP.
• E)neither an inflationary gap nor a recessionary gap.

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Definitions:

Annually

Occurring once every year or relating to a period of one year.

Coupon Bond

A type of bond that pays the holder periodic interest payments called coupons and returns the principal at maturity.

Yield To Maturity

The total return expected on a bond if held until it matures, considering all interest payments and principal repayment.

Par Value

The face value of a bond or the stock value stated in the corporate charter, often used as a reference point for the bond's interest payment.