When the Difference Between Potential GDP and Actual GDP Increases

question 119

True/False

When the difference between potential GDP and actual GDP increases, the nation usually suffers from increased inflation.

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Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity, providing a more accurate comparison of budgeted and actual performance.

Units

The individual articles, products, or services counted to measure and record inventory, production, or sales.

Net Operating Income

A financial metric that calculates a company's income after all operating expenses, excluding taxes and interest, have been deducted from total revenues.

Flexible Budget

A budget that adjusts or varies with changes in volume or activity levels.