If Actual Output Exceeds Potential Output, the Economy

question 21

Multiple Choice

If actual output exceeds potential output, the economy:

• A)is experiencing an inflationary gap.
• B)is experiencing a recessionary gap.
• C)may be in a long-run equilibrium but is not in a short-run equilibrium.
• D)is in neither a short-run nor long-run equilibrium.

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Definitions:

OCD

Obsessive-Compulsive Disorder, a mental health disorder characterized by unwanted repetitive thoughts (obsessions) and behaviors (compulsions).

Hallucinations

Experience of sensing things while awake that appear to be real but instead have been created by the mind.

Sensations

Feelings or perceptions resulting from something that happens to or comes into contact with the body.

SAD

Seasonal Affective Disorder, a type of depression that occurs at a particular time of the year, usually in winter.