If the Aggregate Demand Curve and the Aggregate Supply Curve

question 29

Multiple Choice

If the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP less than potential GDP, there is

• A) an inflationary gap.
• B) falling real GDP.
• C) an above full-employment equilibrium.
• D) a recessionary gap.
• E) a rising price level.

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Definitions:

Rate of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment’s cost.

Internal Rate of Return

The metric used to estimate the profitability of potential investments, calculated as the discount rate that makes the net present value of all cash flows equal to zero.

Cash Outlay

The total amount of cash that is spent by a business or organization for certain purposes or activities, including investments or expenses.

Present Value Factors

Quantitative metrics used to calculate the current worth of a future sum of money or stream of cash flows given a specific discount rate.