An Inflationary Output Gap Implies That

question 116

Multiple Choice

An inflationary output gap implies that

• A)the demand for all factor services will be relatively low.
• B)the intersection of AD and AS occurs at real GDP below potential output.
• C)the economy's resources are being used beyond their normal capacity.
• D)there is a pressure for wages to decrease.
• E)there is excess supply of most factors of production.

---

Definitions:

Volume of Sales

The total number of units of a product or service sold within a specific time frame, often used as an indicator of a company’s performance or consumer demand.

Corporations

Corporations are legal entities owned by shareholders, capable of entering into contracts, owning assets, and being held liable for debts, formed to engage in business activities.

Partnerships

An official form of business where management tasks and earnings are divided among two or more participants.

Legal Partnership

A formal arrangement by two or more parties to manage and operate a business and share its profits, which can have various forms such as general, limited, and limited liability partnerships.