A Large Negative Output Gap

question 38

Multiple Choice

A large negative output gap

• A) represents a shortage of goods due to excessive demand for output
• B) is the result of overtime work by the labor force
• C) creates inflation
• D) means the business cycle is at a peak
• E) implies excessive unemployment

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Definitions:

Normative Statement

A statement that reflects an opinion, value judgment, or what ought to be, rather than what is empirically verifiable.

Positive Statement

An objective statement based on facts that can be tested and validated, used in contrast to normative statements which express opinions or what ought to be.

Normative Statements

Statements that express opinions, desires, or judgments about what should be, and do not make factual or objective claims.

Positive Statements

Objective statements that can be tested, amended, or rejected by referring to the available evidence.