For an Economy Starting at Potential Output, an Increase in Investment

question 129

Multiple Choice

For an economy starting at potential output, an increase in investment 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.

---

Definitions:

Taxable Income

The portion of an individual's or company's income that is subject to taxes according to government regulations.

Income Measurement

The process of determining the monetary amount of the income earned by a business during a specific period.

Constructive Receipt

A tax principle stating that income is considered received by the taxpayer once it is credited to their account or made available without restriction.

Taxable Income

The portion of income used to calculate how much the entity owes in taxes to the government, after all deductions and exemptions are applied.