If Real GDP Is Greater Than Potential GDP, the Economy

question 131

Multiple Choice

If real GDP is greater than potential GDP, the economy is

• A)not in short-run equilibrium.
• B)in a recessionary equilibrium.
• C)in an above full-employment equilibrium.
• D)in a below full-employment equilibrium.
• E)in long-run equilibrium.

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Definitions:

Loose Budgets

A financial plan that allows for higher spending and less stringent controls, often to accommodate for uncertainty or to encourage creativity and innovation.

Cash Budget

A financial plan that estimates incoming and outgoing cash flows over a specific period of time to ensure liquidity and solvency.

Minimum Cash Balance

The lowest amount of cash that a business decides to maintain in its accounts to ensure sufficient liquidity for routine operations.

Cash Disbursements

The outflow of cash for various purposes, including operating expenses, asset acquisitions, and debt payments.