When Real GDP Exceeds Potential GDP, Then the Economy Has

question 192

Multiple Choice

When real GDP exceeds potential GDP, then the economy has

• A) an inflationary gap.
• B) a below-full-employment equilibrium.
• C) a recessionary gap.
• D) None of the above answers are correct.

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Definitions:

Internal Reports

Financial or operational reports intended for use within an organization, not for external stakeholders.

Decision-Making Process

A series of steps followed by an individual or an organization to identify and evaluate options to make a choice.

Variable Costs

Expenses that vary directly with the level of production or sales volume, such as raw materials and direct labor.

Revenues

The gross increase in owner’s equity resulting from business activities entered into for the purpose of earning income.