If Potential Output Equals $8 Billion and Actual Output Equals

question 66

Multiple Choice

If potential output equals $8 billion and actual output equals $10 billion, then this economy has an output gap equal to:

• A) $2 billion.
• B) 20 percent.
• C) 25 percent.
• D) -25 percent.

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Definitions:

Statement of Comprehensive Income

A financial statement that presents a company's total income and expenses, including items that have not been realized, providing a complete picture of its overall financial performance.

Goodwill Impairment

A charge that occurs when the market value of goodwill, an intangible asset, drops below its recorded value on the balance sheet, indicating diminished business value.

Discontinued Operation

A component of a business that has been sold, disposed of, or is held for sale, and is reported separately in financial statements.

Consolidated Financial Statements

Financial statements that present the assets, liabilities, equity, income, expenses, and cash flows of a parent company and its subsidiaries as one single economic entity.