An Inflationary Gap Occurs When

question 58

Multiple Choice

An inflationary gap occurs when:

• A) when prices rise in the economy
• B) potential GDP exceeds actual GDP
• C) full employment GDP exceeds national expenditure
• D) national expenditure exceeds full employment GDP

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Definitions:

Raw Materials Inventory

The total cost of all the components and materials held by a company that are eventually used in the production process.

Gross Margin

The difference between the revenue earned from sales and the cost of goods sold, indicating the profitability from the core business activities before administrative and other expenses.

Merchandise Purchases

Transactions involving the buying of goods for sale, typically in a retail or wholesale business setting.

Inventory Levels

The quantity of goods and materials on hand at a given time within a business.