When the Economy Is Operating at Potential GDP,the Rate of Inflation

question 23

Multiple Choice

When the economy is operating at potential GDP,the rate of inflation is

• A) rising.
• B) neither rising nor falling.
• C) falling.
• D) causing aggregate demand to fall while supply rises.

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Definitions:

Zero

A numerical value representing no quantity or null in mathematical terms; it serves as a placeholder in the decimal system.

NPV

Net Present Value (NPV) is the calculation used to determine the present value of a series of future cash flows minus the initial investment, used in capital budgeting to assess the profitability of an investment.

IRR

The Internal Rate of Return is the discount rate that makes the net present value of all cash flows from a particular project equal to zero.

Mutually Exclusive

situations or events that cannot occur at the same time.