An Inflationary Gap

question 133

Multiple Choice

An inflationary gap:

• A) is generally regarded as desirable, especially by people living on a fixed income.
• B) means that the economy is operating beyond its potential output.
• C) means that there are pressures for wages to fall.
• D) means that SRAS will soon shift rightward.

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Definitions:

Unit Cost

The cost incurred to produce, store, and sell one unit of a product, calculated by dividing total costs by the number of units.

Cost Driver

A factor that causes the cost of an activity or process to change.

Time Frame

The period during which an event occurs or is planned to occur, often with a specified start and end date.

Cost Data

Information related to the amounts incurred to create a product or service, used for budgeting, valuing inventory, and setting selling prices.