According to the AS-AD Model,when Real GDP Exceeds Potential GDP,the

question 48

Multiple Choice

According to the AS-AD model,when real GDP exceeds potential GDP,the unemployment rate is definitely

• A)greater than the natural unemployment rate.
• B)less than the natural unemployment rate.
• C)equal to the natural unemployment rate.
• D)rising.
• E)falling.

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Definitions:

M&M II

Part of Modigliani and Miller's capital structure theories, specifically the proposition that the value of a firm is independent of its capital structure under certain market conditions and tax considerations.

Economic Expansion

A phase of the business cycle where economic activity and output increase, indicating growth in the economy.

EBIT

Earnings Before Interest and Taxes - a measure of a firm's profit that includes all expenses except interest and income tax expenses.

Capital Structure

The mix of debt, equity, and other securities that a company uses to finance its overall operations and growth.