When Actual Output Exceeds Potential Output,there Is ________ Output Gap

question 37

Multiple Choice

When actual output exceeds potential output,there is ________ output gap and the rate of inflation will tend to ________.

• A) an expansionary;increase
• B) an expansionary;decrease
• C) no;remain the same
• D) a recessionary;increase
• E) a recessionary;decrease

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Definitions:

Bond Swap

A strategy that involves selling one bond and using the proceeds to purchase another bond, typically to improve yield or extend maturity.

Yield To Maturity

The total return anticipated on a bond if held until it matures, including all interest payments and the repayment of principal.

Bond's Value

The present worth of a bond's future interest payments and its repayment of principal at maturity, adjusted for current market interest rates.

9-Year Duration

A metric indicating the sensitivity of a bond's price to changes in interest rates, represented here as the bond having an average response over a nine-year period.