If Actual Output Equals Potential Output, but Potential Is Growing

question 34

Multiple Choice

If actual output equals potential output, but potential is growing unusually slowly, then an economy:

• A) is in a recession.
• B) is in an expansion.
• C) has an output gap.
• D) has a recessionary gap.

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Definitions:

Finishing Department

The sector in a manufacturing process where products undergo final treatments, such as polishing, painting, or packaging, before being sold or shipped.

Predetermined Overhead Rate

A calculated rate used to assign manufacturing overhead costs to individual products, based on estimated or known factors.

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process or delivery of services.

Machine-Hours

The total number of hours that machinery is in operation during a specific period.