The Difference Between Full-Employment Output and the Amount of Output

question 91

Multiple Choice

The difference between full-employment output and the amount of output demanded at current price levels is equal to the:

• A) Real GDP.
• B) Multiplier.
• C) Potential GDP.
• D) GDP gap.

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Definitions:

Vertical Equity

A principle in taxation that individuals with a higher ability to pay should contribute more taxes.

Progressivity

Refers to a tax system in which the tax rate increases as the taxable amount increases.

Irving Fisher

An American economist known for his work in the field of economics, including the theory of interest and the equation of exchange.

Tax on Consumption

A levy placed on the spending on goods and services, often implemented through sales tax or value-added tax (VAT).