An Inflationary Output Gap Is Characterized by

question 149

Multiple Choice

An inflationary output gap is characterized by

• A)falling prices.
• B)constant prices.
• C)real output that varies one-for-one with aggregate demand.
• D)real GDP exceeding potential output.
• E)real GDP falling below potential output.

---

Definitions:

Property, Plant, and Equipment

Long-term tangible assets used in the operation of a business, not expected to be converted to cash in the next year.

Depreciation

The accounting process of allocating the cost of tangible assets over their useful lives.

Direct Labor Variances

The difference between the actual and standard labor costs incurred by a business during a specific period.

Direct Labor Costs

The wages and benefits paid for labor that is directly involved in the production of goods.