An Inflationary Gap

question 73

Multiple Choice

An inflationary gap

• A) exists when actual spending is less than intended spending.
• B) measures the additional intended spending needed to ensure full employment.
• C) indicates the additional spending needed to lower the rate of inflation.
• D) measures the increase in GDP needed to achieve full employment.
• E) can be eliminated by fiscal policies designed to shift the aggregate demand curve to the left.

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Definitions:

Inventory Count

The physical verification of the quantities and condition of items in a company's inventory.

FIFO

This inventory management and valuation method assumes that the oldest products are sold or used first; an acronym for "First In, First Out," detailing a specific approach to inventory and asset management.

Periodic Inventory System

An inventory accounting system where stock levels and cost of goods sold are calculated at the end of an accounting period, rather than being continuously updated.

Ending Inventory

The price of items for sale at the closing of a fiscal period.