If Potential Output for an Economy Equals $8 Billion and Actual

question 114

Multiple Choice

If potential output for an economy equals $8 billion and actual output equals $7 billion, then this economy's output gap should be expressed as:

• A)−$1 billion.
• B)$1 billion.
• C)12.5 percent.
• D)−12.5 percent.

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Definitions:

Basal Metabolic Rate

The velocity at which the body expends energy in a resting state to keep up primary functions, including breathing and staying warm.

Metabolic Rate

Metabolic Rate is the rate at which the body consumes energy, measured in calories, reflecting the speed of bodily processes and functions.

Incentives

Incentives are rewards or penalties that motivate individuals to perform certain actions or modify behavior.

Drive-Reduction Theory

A psychological motivation model that explains behavior as being driven by the desire to reduce needs and return to a state of homeostasis.