If the Current Real GDP Is Less Than Natural Real

question 79

Multiple Choice

If the current Real GDP is less than Natural Real GDP,then the economy is

• A) in long-run equilibrium.
• B) in a recessionary gap.
• C) in an inflationary gap.
• D) possibly in short-run equilibrium.
• E) b and d

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Definitions:

Medium of Exchange

A medium of exchange is anything widely accepted as a form of payment, making trade easier by eliminating the need for a coincidence of wants.

Store of Value

An asset, commodity, or currency that can be saved, retrieved, and exchanged in the future without significantly losing value.

Holding Wealth

The act of owning, managing, and retaining assets or capital with the goal of increasing financial security and potential for future income.

Double Coincidence of Wants

A situation in barter economies where two parties each hold an item the other wants, allowing them to exchange goods directly.