The Economy Is in a Recessionary Gap,there Is Incomplete Crowding

question 56

Multiple Choice

The economy is in a recessionary gap,there is incomplete crowding out,and government implements expansionary fiscal policy.It follows that

• A) Real GDP will fall.
• B) the AD curve will shift to the right.
• C) the price level will fall.
• D) the recessionary gap will necessarily be completely eliminated.
• E) b and d

---

Definitions:

Service Life

Service life refers to the estimated period during which an asset is expected to be functional and economically usable.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting its decrease in value over time.

Journal Entry

A record in accounting that represents a financial transaction in a double-entry bookkeeping system, documenting debits and credits to accounts.

Net Income

The earnings left for a firm after deducting expenses, taxes, and all other costs from the total income.