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Starting from Potential Output, If Consumer Confidence Decreases and Consumers

question 91

Multiple Choice

Starting from potential output, if consumer confidence decreases and consumers decide to spend less, then this will generate a(n) ________ gap and inflation will ________.


Definitions:

Equipment

Tangible property used in the operations of a business, such as machinery and tools, which are not intended for sale.

Incremental Borrowing Rate

The interest rate a company would have to pay if it borrows funds, used as a benchmark in lease agreements to calculate the present value of minimum lease payments.

Balance Sheet

A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time.

Liability

Financial obligations or debts owed by a business to others, which must be settled over time through the transfer of economic benefits.

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