A Recessionary Gap Occurs When

question 327

Multiple Choice

A recessionary gap occurs when

• A) real GDP is less than potential GDP.
• B) nominal GDP is less than potential GDP.
• C) high rates of inflation occur.
• D) nominal GDP is greater than potential GDP.

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Definitions:

Trial Balance

A financial worksheet that gathers the balances from all accounts into debit and credit columns, verifying the mathematical accuracy of a company's accounting system.

Recording Process

The method of capturing and documenting financial transactions in the accounting records.

Journalizing

The process of recording business transactions in the journal or books of original entry in accounting.

Posting

The process of transferring journal entry information to the ledger, ensuring every debit and credit transaction is recorded in the correct accounts.