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:

Total Direct Materials Cost Variance

The difference between the budgeted cost of direct materials and the actual cost incurred for the materials.

Direct Materials

Raw materials that are directly used in the manufacturing of a product and can be easily traced to it.

Controllable Variance

The difference between expected and actual costs that managers have the power to influence directly.

Direct Labor Rate Variance

This refers to the difference between the actual cost of labor and the expected (or standard) cost of labor used in producing goods.