Typically, the Higher the Level of Income Per Person in a Country

question 58

Multiple Choice

Typically, the higher the level of income per person in a country, the higher the level of spending per person on health care.This relationship between income and spending indicates that health care is a

• A)normal good.
• B)inferior good.
• C)luxury.
• D)necessity.

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Definitions:

Potential Output

The maximum amount of goods and services an economy can produce when it is fully employing its resources.

Aggregate Demand

The total demand for all goods and services in an economy at various price levels, over a specific time period.

Expansionary Gap

A situation where the actual output in an economy is higher than the potential output, often leading to inflation.

Potential GDP

The maximum output an economy can achieve when all resources are used efficiently and effectively, without causing inflation.