When the Actual GDP Equals the Full-Employment Level of GDP

question 49

Multiple Choice

When the actual GDP equals the full-employment level of GDP, the

• A) economy is in long-run equilibrium.
• B) price level must be rising.
• C) expected inflation must be zero.
• D) aggregate supply curve is not constrained by the scarcity of resources.

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Definitions:

Payment

The act of transferring money or other valuable items in exchange for goods, services, or to fulfill a legal obligation.

Effective Interest Method

A method of calculating the interest expense on a bond or loan that considers the impact of amortizing premium or discount over the life of the financial instrument.

Interest Expense

The cost incurred by an entity for borrowed funds, such as loans or bonds.

Discount on Bonds Payable

The difference when a bond is issued for less than its face value, which affects the interest expense over the bond's life.