When Real GDP Is Less Than Potential GDP, an Increase

question 101

Multiple Choice

When real GDP is less than potential GDP, an increase in government expenditures will ________ real GDP and ________ the price level.

• A) increase; raise
• B) increase; lower
• C) decrease; raise
• D) decrease; lower

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Definitions:

Treasurer

An executive responsible for managing a company's investments, cash flow, financial planning, and related records.

Master Budget

A comprehensive financial planning document that consolidates all of a company's individual budgets relating to sales, cost of goods sold, operations, and capital expenditures into one overarching budget.

Sales Budget

A financial plan that estimates the expected sales revenue for a period, including units sold and revenue expected.

Cash Budget

A cash budget is a financial plan or forecast that outlines expected cash inflows and outflows over a specific period, helping businesses manage their cash flow.