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If the Economy Is at Equilibrium Above Potential Output, There

question 98

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If the economy is at equilibrium above potential output, there is a(n) _____ gap, and _____ fiscal policy is appropriate.


Definitions:

Income

The total money received by an individual or household from various sources like wages, investments, and benefits, over a specific period.

Utility Function

A mathematical representation that describes how the total utility of a consumer depends on the consumption of various goods and services.

Budget Line

A visual depiction of every potential pair of two products a consumer is able to buy based on their earnings and the costs of these items.

Utility Function

A mathematical representation of how different quantities of goods or services translate into levels of happiness or satisfaction for an individual or society.

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