When Real GDP Is Less Than Potential GDP, There Is

question 36

Multiple Choice

When real GDP is less than potential GDP, there is ________ which leads the unemployment rate to ________.

• A) an inflationary gap; rise
• B) a recessionary gap; decline
• C) a recessionary gap; remain at the natural level
• D) an inflationary gap; remain at the natural level
• E) a recessionary gap; rise

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Definitions:

Settlement

The process of transferring ownership of securities from the seller to the buyer and the corresponding payment from the buyer to the seller.

Accrued Interest

Interest that has been incurred but not yet paid, often considered in bond pricing and transactions.

Financial Press

Media outlets that provide news, analysis, and commentary on financial and economic subjects, including markets and business trends.

Bond Price

The market value of a bond, which fluctuates based on interest rates, credit quality, and the bond's time to maturity.