For an Economy Starting at Potential Output, a Decrease in One

question 29

Multiple Choice

For an economy starting at potential output, a decrease in one or more of the components of aggregate expenditure in the short run results in a(n) :

• A) expansionary output gap.
• B) recessionary output gap.
• C) increase in potential output.
• D) decrease in potential output.

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Definitions:

Budgeted Purchases

Estimated amounts allocated for the acquisition of goods or services during a specific budget period.

Inventory Levels

The quantity of goods and materials a company has in stock at any given time.

Sales Representatives

Individuals who represent a company's products or services and are responsible for extending its market reach by securing sales, clients, or contracts.

Selling Expenses

Costs incurred directly from the selling of products or services, including advertising, commission, and distribution costs.