The Table Below Shows Data for India's Economy If Potential GDP in India Is ________ Million Rupees,India Is

question 329

Multiple Choice

The table below shows data for India's economy. Real GDP is measured in millions of rupees. $$\begin{array} { | c | c | c | c | } \hline & \text { Price level } & \begin{array} { c } \text { Real GDP } \\\text { supplied in the short } \\\text { run }\end{array} & \text { Real GDP demanded } \\\hline \text { a } & 114 & 23,501 & 35,898 \\\hline \text { b } & 120 & 25,355 & 32,341 \\\hline \text { c } & 125 & 27,670 & 27,670 \\\hline \text { d } & 131 & 30,366 & 18,569 \\\hline \text { e } & 138 & 33,164 & 15,898 \\\hline\end{array}$$
If potential GDP in India is ________ million rupees,India is experiencing ________.

• A) 26,500; an inflationary gap
• B) 28,500; an above full-employment gap
• C) 26,500; a recessionary gap
• D) 30,000; a potential GDP gap

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Definitions:

Overhead Volume Variance

The flexible budget at standard volume less the overhead applied. It is an estimate of the unused or overused fixed plant capacity.

Planned Overheads

The estimated costs of indirect materials, labor, and other expenses necessary to run operations that are budgeted for a specific period.

Actual Overheads

The real costs incurred in the day-to-day operation of a business, including utilities, rent, and maintenance.

Capacity Utilization

A measure of how effectively an entity is using its production or operational capacity.