When an Expansionary Gap Exists, Actual Output ________ Potential Output

question 96

Multiple Choice

When an expansionary gap exists, actual output ________ potential output and the rate of inflation will tend to ________.

• A)exceeds; increase
• B)exceeds; decrease
• C)is less than; decrease
• D)is less than; increase

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Definitions:

Cost Of Goods Sold

The immediate expenses linked to the manufacturing of goods a company sells, encompassing costs for materials and labor.

Current Assets

Short-term assets that a company owns, which are expected to be converted into cash within one year, such as inventory, cash, and accounts receivable.

Average Collection Period

A financial metric that measures the average number of days it takes a company to collect payments from its credit sales.

Fixed Assets

Long-term tangible assets held for business use and not expected to be converted to cash in the upcoming fiscal year, such as machinery, buildings, and land.