Using the Aggregate Expenditure-Output Model, Assume the Aggregate Expenditures (AE)

question 88

Multiple Choice

Using the aggregate expenditure-output model, assume the aggregate expenditures (AE) line is above the 45-degree line at full-employment GDP. This vertical distance is called a(n) :

• A) inflationary gap.
• B) recessionary gap.
• C) negative GDP gap.
• D) marginal propensity to consume gap.

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Definitions:

Reasonable Security

Measures taken to protect against foreseeable threats to safety and security.

Liability

A legal responsibility or obligation, often involving the need to pay damages or restitution as a result of one's actions or failure to act.

Implied Warranty

A legal guarantee implied by law that ensures goods or services sold are of satisfactory quality and fit for their intended purpose.

Insurer

An entity that provides insurance, promising to cover a specific set of risks in exchange for a premium.