During a Period When Total Spending Is Too High Relative

question 8

Multiple Choice

During a period when total spending is too high relative to potential output,the economy experiences

• A) excessive unemployment.
• B) falling average prices.
• C) a glut.
• D) a Great Crash.
• E) inflation.

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Definitions:

Section 1231 Loss

A loss from the sale or exchange of property used in a trade or business that can be deductible for tax purposes.

Section 1231 Property

Refers to a type of property, both tangible and depreciable, used in a business and held for more than one year, which qualifies for tax treatment that combines aspects of capital gains and ordinary income tax rates.

Trade or Business

Activity conducted for the purpose of earning income or profit, involving regular and continuous activities in a particular field.

Deemed Worthless

A term referring to assets that have become valueless and are recognized as a loss for tax purposes.