If Real GDP Equals C in the Diagram Below

question 121

Multiple Choice

If real GDP equals C in the diagram below,

• A)distance df represents a budget surplus.
• B)distance de represents a budget surplus.
• C)there is a structural surplus.
• D)there is a structural deficit.
• E)distance de represents a cyclical surplus.

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Definitions:

Externalities

Spillover effects of an activity that influence the well-being of nonconsenting parties.

Opportunity Cost of Capital

The potential return that is foregone by investing capital in one project rather than an alternative investment.

Stockholder Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the ownership interest of shareholders.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, indicating the extent to which a firm has exceeded the break-even point.