If Actual GDP Is Less Than Potential Output, Then the Economy

question 44

Multiple Choice

If actual GDP is less than potential output, then the economy is:

• A) in an inflationary gap.
• B) in a recessionary gap.
• C) in a long-run equilibrium.
• D) at full employment.

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Definitions:

Upholstering

Involves covering furniture with padding, springs, webbing, and fabric or leather covers, enhancing its appearance and comfort.

Right of Exoneration

A legal principle that allows a person who has discharged a debt or obligation, which was owed jointly with others, to obtain reimbursement from the other parties responsible for the debt.

Surety

A financial agreement where a third party (surety) guarantees the obligations of a debtor to the creditor, providing assurance that the debtor's obligations will be fulfilled.

Artisan's Service

The work or craft of skilled manual workers who make items largely by hand, often with traditional methods.