If Potential Output Equals $8 Billion and Actual Output Equals

question 18

Multiple Choice

If potential output equals $8 billion and actual output equals $9 billion, then this economy has a(n) :

• A)budget deficit.
• B)trade deficit.
• C)expansionary gap.
• D)recessionary gap.

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Definitions:

Bank

A banking entity authorized to accept deposits, extend credit, and offer diverse financial services to both private individuals and commercial entities.

Authorization to Confess Judgment

A legal provision where a debtor gives a creditor the right to enter a judgment against them without trial if they fail to meet the terms of an agreement.

Negotiability

This term refers to the characteristic of a financial instrument that enables it to be transferred or assigned from one party to another with ease and legal effect.

I.O.U.

An informal document acknowledging a debt owed.