If Our Economy Is Growing at a Constant Rate of 5

question 83

Multiple Choice

If our economy is growing at a constant rate of 5 percent per year, then over a period of 10 years we would expect to see which of the following?

• A) Nice, steady flat-line growth
• B) An upward sloping growth path
• C) A downward sloping growth path
• D) It is impossible to say what kind of growth path we would see.

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Definitions:

Recessionary Gap

The difference between the actual output in an economy and the potential output it could achieve with full employment.

Foreign Exchange

The conversion or trading of one currency into another currency.

Federal Budget Deficit

The financial shortfall when a government's expenditures exceed its revenues within a given fiscal year.

Aggregate Demand

The total demand for goods and services within an economy at a given overall price level and in a given time period.