What Is an Inflationary Gap

question 84

Multiple Choice

What is an inflationary gap?

• A)The difference between nominal and Real GDP.
• B)The difference between actual and potential Real GDP when the economy is below its potential.
• C)The difference between the quantity of goods and services demanded and supplied.
• D)The difference between actual and potential Real GDP when the economy is above full employment.

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Definitions:

Accommodation

In cognitive psychology, the process by which existing mental schemas are modified or new schemas are created to absorb new information.

Theory of Mind

The ability to attribute mental states—beliefs, intents, desires, pretending, knowledge—to oneself and others and to understand that others have beliefs, desires, and intentions that are different from one's own.

Object Permanence

The understanding that objects continue to exist even when they cannot be observed (seen, heard, touched, smelled, or sensed in any way).

False Belief

A misunderstanding or incorrect interpretation about the state of the world, often studied in the context of cognitive and developmental psychology.