Actual Output Falls Below Potential Output

question 99

Multiple Choice

Actual output falls below potential output

• A)during a recession
• B)when aggregate demand exceeds aggregate supply
• C)when the natural rate of unemployment exceeds the actual rate of unemployment
• D)when the natural rate of unemployment is zero
• E)when short run aggregate supply exceeds long run aggregate supply

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Definitions:

Comprehensive Income

Represents the total change in equity for a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all non-owner changes in equity, not just the net income.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life for accounting and tax purposes.

Net Working Capital

The gap between what a company owns in the short term (current assets) and what it owes (current liabilities), revealing its financial stability in the near term.

Operating Cash Flow

Operating cash flow is a measure of the cash generated by a company's regular business operations, indicating whether a company is able to generate sufficient positive cash flow to maintain and grow its operations.