A Recessionary Gap Develops _____

question 164

Multiple Choice

A recessionary gap develops _____

• A) when actual output exceeds potential output.
• B) when resource prices are "sticky" upward.
• C) only when the economy is in a recession.
• D) only when GDP grows by more than 4 percent.
• E) only when unemployment exceeds its natural rate.

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Definitions:

Gross Earnings

The total income earned by an individual or business before any deductions or taxes.

Federal Income Taxes

Taxes imposed by the federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.

Net Pay

The amount of money an employee receives after deductions such as taxes and retirement contributions are subtracted from their gross salary.

Payroll

The total amount of wages, salaries, and other compensation that a company owes to its employees for a set period.