Suppose the Economy Operates at Potential Output, If the Amount

question 181

Multiple Choice

Suppose the economy operates at potential output, if the amount that businesses plan to invest is greater than the amount that consumers plan to save, then

• A)there will be an inflationary gap.
• B)there will be a recessionary gap.
• C)equilibrium GDP will be less than aggregate investment.
• D)the economy will experience inventory accumulation.

Apply the concept of stock valuation in variable dividend and growth scenarios.

Understand the regulatory and financial reporting context for dividends, including historical earnings basis for P/E ratios and partial excludability of dividends.

Understand the various forecasting methods and their specific applications.

Calculate and interpret the mean absolute deviation (MAD) to measure forecast accuracy.

---

Definitions:

Volume

The quantity of space taken up by a substance or object, or contained within a vessel.

Scientific Method

A systematic approach to inquiry that involves making observations, forming hypotheses, conducting experiments, and drawing conclusions.

Hypothesis

A supposition or proposed explanation made on the basis of limited evidence as a starting point for further investigation.

Scientific Method

A systematic approach to research and experimentation used to explore observations and answer questions.