During a Recession

question 29

Multiple Choice

During a recession,

• A) real GDP is equal to potential GDP.
• B) the actual unemployment rate is less than the natural unemployment rate.
• C) the relationship between real GDP and potential GDP no longer exists.
• D) real GDP is greater than potential GDP.
• E) real GDP is less than potential GDP.

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Definitions:

Corporate Pretax Profits

The earnings of a corporation before income taxes are deducted, reflecting the operational and financial performance of the company.

Present Value

The current worth of a future sum of money or stream of cash flows, given a specified rate of return.

Interest Rate

The percentage at which interest is paid by a borrower for the use of money they borrow from a lender.

Exploitation

The act of treating someone unfairly in order to benefit from their work or the use of resources without just compensation.