If Potential Output Equals $5 Billion and Actual Output Equals

question 183

Multiple Choice

If potential output equals $5 billion and actual output equals $6.5 billion, then this economy has a(n) :

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

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Definitions:

Physical Capital

Tangible assets that are used in the production of other goods or services, such as buildings, machinery, and equipment.

Technological Improvements

Innovations and advancements that enhance productivity, efficiency, and product quality in various industries.

Standard Of Living

The level of wealth, comfort, material goods, and necessities available to a person, group, or country.

Worker-Hour

A unit of measure representing the amount of work accomplished by one worker in one hour.