When Equilibrium Real GDP Falls Short of Potential GDP, There

question 54

Multiple Choice

When equilibrium real GDP falls short of potential GDP, there is a(n)

• A)inflationary gap.
• B)potential gap.
• C)recessionary gap.
• D)precautionary gap.

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Definitions:

Balance Sheet

A financial statement that provides a snapshot of a company's financial position at a specific point in time, showing assets, liabilities, and shareholders' equity.

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents.

Long-Term Capital Gains

Profits from the sale of an asset held for more than a specified period, typically taxed at a lower rate than short-term gains.

Dividends

Payments made by a corporation to its shareholder members, typically from profits or reserves.