If the Economy Is in an Inflationary Gap and the Government

question 203

Multiple Choice

If the economy is in an inflationary gap and the government attempts to balance the budget, the effect will be to

• A)counteract inflation.
• B)reduce the trade deficit.
• C)continue inflationary pressures.
• D)increase unemployment.

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Definitions:

Least-Squares Regression

The least-squares regression is a statistical method used to determine a line of best fit by minimizing the sum of squares created by a mathematical function.

Curvilinear Cost

A cost behavior that does not consistently increase or decrease but varies based on changes in activity level, illustrating a non-linear relationship.

Mixed Cost

A cost that contains a combination of fixed and variable components and changes in total with the level of output or activity.

Step-Wise Cost

Costs that remain fixed for certain levels of production but can change to a different fixed rate when production levels increase or decrease.