If the Economy Is at Potential Output and the Fed

question 250

Multiple Choice

If the economy is at potential output and the Fed increases the money supply, in the long run real GDP will likely:

• A) fluctuate randomly.
• B) remain the same.
• C) decrease.
• D) increase.

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Definitions:

Damaged Goods

Items that are broken, defective, or impaired in some way, which typically reduce their value or usefulness.

Period-End Inventory

The total value of all inventory still available for sale by a company at the end of an accounting period.

Gross Profit

Gross profit is the difference between the sales revenue and the cost of goods sold, illustrating how much a company earns from selling its products before other expenses are deducted.

Cost Of Goods Available

The total cost of merchandise a company has for sale, which includes the beginning inventory plus the cost of goods purchased minus ending inventory.