The GDP Gap Is

question 40

Multiple Choice

The GDP gap is:

• A) the product of the potential real GDP and the equilibrium level of real GDP.
• B) the distance between the current level of real gross domestic product and full employment real GDP.
• C) the difference between potential real GDP and the equilibrium level of real GDP.
• D) the difference between the present value of all of government's projected financial obligations and the present value of all projected future tax and other receipts.
• E) the difference between the actual output of an economy and its potential output.

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Definitions:

Contribution Margin

The amount remaining from sales revenue after variable expenses are deducted, showing the revenue available to cover fixed expenses and provide profit.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, demonstrating the effect of fixed costs on profits.

Contribution Margin

The difference between the sales price of a product and its variable costs, used to cover fixed costs and profit.

Sales Mix

The composition of different products or services sold by a company, which can significantly impact profitability based on the varying margins of each item.