If the Output Gap Equals 1.8 Percent, Then

question 81

Multiple Choice

If the output gap equals 1.8 percent, then:

• A)cyclical unemployment equals the sum of structural and frictional unemployment.
• B)there is an expansionary gap.
• C)there is significant cyclical unemployment.
• D)potential GDP exceeds actual GDP.

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Definitions:

Goods Purchased

The total value of all goods bought by a company for resale or for use in production.

Manufacturing Overhead

All the indirect costs associated with manufacturing a product, including indirect materials, labor, and expenses such as utilities and rent.

Product Costs

Product costs are the costs directly attributed to the creation of a product, including materials, labor, and overhead.

Direct Materials

Raw materials that can be directly identified with the production of specific goods or services.