A Negative GDP Gap Can Be Caused by Either a Decrease

question 25

True/False

A negative GDP gap can be caused by either a decrease in aggregate demand or a decrease in
aggregate supply.

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Definitions:

Fast-Second Strategy

A business approach where companies quickly follow pioneers in a market, improving on their innovations or reducing costs to gain competitive advantage.

Economic Efficiency

The optimal distribution of resources to meet the needs and wants of a society, minimizing waste and maximizing value.

Productive Efficiency

A situation in which a firm or economy produces goods at the lowest possible cost, utilizing all available resources efficiently.

Allocative Efficiency

A state of the market where resources are allocated in a way that maximizes total consumer and producer surplus.