If Potential Output Equals $8 Billion and Actual Output Equals

question 94

Multiple Choice

If potential output equals $8 billion and actual output equals $7 billion, then this economy has a(n) :

• A) budget deficit.
• B) trade deficit.
• C) expansionary gap.
• D) recessionary gap.

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Definitions:

Taxable Temporary Difference

A difference between the carrying amount of an asset or liability in the balance sheet and its tax base, which will result in taxable amounts in future periods when the carrying amounts are recovered or settled.

Plant Asset

Long-term tangible assets used in the operations of a business, such as machinery, buildings, and equipment, often subject to depreciation.

Group's

Referring to entities or assets owned or controlled by a collection of individuals or a parent company operating as a single economic entity.

Intragroup Dividends

Dividends paid between companies within the same group, which may have implications for the group's consolidated financial statements.